Influence-Peddling Scandal Rocks Korea: QuickTake Q&A

07-Dec-2016 Intellasia | Bloomberg | 6:00 AM Print This Post

South Korean President Park Geun-hye is embroiled in her biggest political crisis since coming to power in 2013. Allegations that her old friend, Choi Soon-sil, peddled influence through their relationship have added to public disenchantment with the nation’s first female president, sinking Park’s approval rating to an all-time low. Prosecutors say she “colluded” with former aides, and a growing number of lawmakers are seeking her impeachment. Park now says she’s willing to resign, but opponents say that’s a ruse.

1. What are the allegations?

Choi has been arrested on suspicion of attempted fraud over allegations that she used her relationship with Park to pressure some of the country’s biggest corporations into donating tens of millions of dollars to her foundations. Park has apologised three times over the scandal in national televised addresses, and has acknowledged she consulted Choi on “certain documents.” Her lawyer has rejected the prosecutors’ allegations, saying they are based on “imagination and conjecture.”

2. Who is Choi?

Choi is the daughter of a man who ran a little-known religious sect and founded a volunteer group that Park helped run. The two women formed a friendship when Park became acting first lady for her father, Park Chung-hee, after her mother died during a botched assassination attempt on the dictator in 1974. Park has long been hounded by allegations that she allowed the Chois to take advantage of her high profile to extract money from businesses – claims she denied in her media address.

3. Why is this shaking South Korea?

Park’s response to the crisis has fanned suspicions that Choi may have meddled more extensively in government affairs, as well as peddling influence over businesses. Hundreds of thousands of people have taken to the streets of Seoul in recent weeks to call for Park’s resignation and arrest. Even voters in Park’s political stronghold in the southeast of the country are turning against the president.

4. What does this mean for Park?

While the constitution protects a president from indictment, it allows for impeachment by a two-thirds vote of the 300-member National Assembly. A faction of Park’s ruling Saenuri party is calling for her ouster, putting the opposition closer to the numbers needed to impeach her. After showing few signs that she planned to step down, with about 16 months left in her single five-year term, she now says she is willing to resign and asked parliament to decide the direction of a power transition. The legislature will now have to debate how to deal with Park’s proposal.

5. So is this the end for Park?

Not necessarily. Kim Yun-cheol, who teaches political science at the Humanitas College of Kyung Hee University in Seoul, says she’s buying time and knows lawmakers can’t easily reach agreement. The opposition Democratic Party of Korea says that by offering to resign, Park is employing a “petty ruse” to avoid being impeached.

6. What does the law say?

South Korean law stipulates that the Constitutional Court should make the final decision within 180 days after it receives an impeachment proposal from the National Assembly. At least seven judges are required to try an impeachment case, while at least six have to vote for the proposal to be eventually passed. Park’s resignation would trigger a presidential election within 60 days, with the prime minister taking over as interim leader.

7. Why should markets care?

Asia’s fourth-largest economy already faces questions about its ability to maintain economic growth. Its shipbuilding and steel industries are faltering while electronic giants like Samsung Electronics face stiff competition from Chinese manufacturers. The political instability may add to what Bank of Korea Governor Lee Ju-yeol calls uncertainties. It may also deepen worries about long-term growth prospects and the country’s competitiveness.

The Reference Shelf

A QuickTake Q&A on the problems with South Korea’s family-run conglomerates,

A list of ten South Korean figures considered potential presidential runners next year.

A Time magazine story on Park’s life.

Park’s profile on the presidential website.


Category: Korea

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