[Inside Chodong]Unending 'Elite Cartel-Type Corruption'

Kim Man-bae, the largest shareholder of Hwacheon Daeyu, who has been suspected of receiving special favors during the development process of Daejang-dong in Seongnam-si, Gyeonggi-do, is appearing at the Yongsan Police Station in Seoul on the 27th of last month for investigation. Photo by Kang Jin-hyung aymsdream@

Michael Johnston, a political science professor at Colgate University in the United States and a global authority on corruption issues, categorized types of corruption by country into four types in his book The Syndrome of Corruption. The first stage is 'dictatorial corruption,' which mainly appears in politically underdeveloped countries such as China and Indonesia. The second stage, 'clan-based corruption,' is also a form of underdeveloped country corruption and includes countries like Russia and the Philippines. The fourth stage is 'market lobbying corruption,' which mainly applies to developed countries such as the United States, the United Kingdom, Canada, and Japan. South Korea, along with Italy, was classified as a third-stage 'elite cartel-type corruption' country. The elite cartel type is said to appear in cultures that emphasize personal connections. It is defined as a form in which elites?politicians, high-ranking officials, executives of large corporations, and journalists?form a power-maintaining base through academic and regional ties and pursue profits through corrupt acts on top of that.

The Daejang-dong development project in Seongnam City, Gyeonggi Province, which shocked the entire country after it was revealed that an investment of about 300 million KRW yielded profits exceeding 400 billion KRW, can be considered a typical example of 'elite cartel-type corruption' strongly influenced by their exclusive network. Kim Man-bae, the major shareholder of Hwacheon Daeyu, who stood at the center of the incident, graduated from Sungkyunkwan University and worked for a long time as a legal correspondent for media outlets, building connections with the power elite. Lee Seong-moon, who recently served as the CEO of Hwacheon Daeyu, reportedly took the position at Kim’s suggestion as a university alumnus.

Lee Han-seong, the CEO of Cheonhwa Dongin No. 1, a Hwacheon Daeyu affiliate that generated the highest profits, is also a Sungkyunkwan University graduate. He met Kim through a university alumni gathering and joined Hwacheon Daeyu as a registered director in 2019. Ko Jae-hwan, CEO of Seongnam’s Deul, the implementing company of the Daejang-dong development project, is also an alumnus of the same university. Ko, who graduated from law school, is a classmate of former Hwacheon Daeyu CEO Lee Seong-moon from the class of ’87. Gwak Sang-do, who recently resigned from his parliamentary position after it was revealed that his son received a retirement payment of 5 billion KRW from Hwacheon Daeyu, is also a Sungkyunkwan University alumnus.

The legal advisory group of Hwacheon Daeyu, which has only 16 employees, was composed of a star-studded lineup including former Supreme Court Justice Kwon Soon-il, former special prosecutor Park Young-soo, and former Suwon District Prosecutor General Kang Chan-woo, all stemming from major shareholder Kim’s network. They received tens of millions of KRW monthly as advisory fees from Hwacheon Daeyu. Kim explained this by saying, "I invited older brothers I like as mentors, and there was no quid pro quo," but the amount given for the reason of "older brothers I like" is large and the explanation is far removed from common sense. It is reasonable to say that the essence of this case is that elites such as politicians, legal professionals, and journalists, transcending political factions, formed a real estate cartel through academic and regional ties and secured enormous vested interests. This is a typical 'elite cartel-type corruption' as mentioned by Professor Johnston.

In South Korea, academic and regional ties mostly flow into closed nepotism. Not only in politics but also economically and socially, private relationships in the form of personal connections form a link in the food chain, damaging organizations and becoming hotbeds of corruption. Professor Johnston pointed out that what enables the dominance of the 'elite cartel' is an excessively large government, an unproductive National Assembly, and courts and party systems that fail to perform their functions. This is a message everyone should deeply reflect on during a time when elite cartel-type corruption is rampant.

This content was produced with the assistance of AI translation services.