October 5, 2017 10:00 am JST

South Korea's anti-graft rules appear to be working, mostly

Restaurants take a hit, but people still approve of crackdown

SOTARO SUZUKI, Nikkei staff writer

Strict caps on gifts to South Korea's civil servants have lifted sales of presents in the allowed price range.

SEOUL For one woman here, South Korea's year-old anti-graft law means never having to buy another designer scarf for her child's teacher.

"You don't have to worry about what to give the teacher anymore" for Teachers' Day, she cheerfully reports, referring to the May holiday. She recalls spending on name-brand accessories while wearing cheap ones herself. With academic background as crucial as it is to South Korean children's futures, parents would do what they could on this day to keep their child in the teacher's good books. That has changed.

A year after South Korea tightly capped gifts to figures including the likes of private-school teachers and journalists, this shock treatment for the nation's chronic wine-and-dine culture appears to have won wide support -- though eating and drinking establishments are pushing back as sales suffer.

In a September survey by the Korea Institute of Public Administration, 89% of the general public and 95% of civil servants supported the new law, suggesting that both givers and recipients view the legislation positively.

MIXED RECEPTION Spending on gifts and entertainment slid 15% on the year in the first half of 2017 at 500 major domestic corporations, according to South Korean private research firm CEO Score. Three out of four companies cut back on this expense, despite a 6% increase in sales for the period, suggesting that the law had an effect.

Changes can also be seen in consumer habits. During the fall harvest holiday of Chuseok, a prime gift-giving season, sales of items priced under the legal limit of 50,000 won ($43) for presents were up more than 50% on the year at Lotte Shopping unit Lotte Department Store.

But restaurants have been hit hard. The graft law caps meal gifts at 30,000 won, far below what would previously have been normal to spend. Sales were down at 66% of 420 businesses surveyed from Sept. 11 to Sept. 16 by the Korea Foodservice Industry Research Institute. The average decline was 22%.

Restaurants have appealed to the government to raise the cap, saying that they are responding with staff cuts and menu revisions but that at this rate will have to close a significant number of locations, possibly for good.

There were 4,052 reported breaches of the anti-graft law -- known as the Kim Young-ran Act for the former judge who proposed it -- in the 10 months through July, according to a survey of public institutions by the Anti-Corruption and Civil Rights Commission. Fines were imposed in 29 cases, and 11 led to prosecution and criminal penalties.

Having friends in high places matters in South Korea's culture of personal connections. The new law appears to be having a restraining effect on the lavish entertaining blamed for breeding corruption and impropriety. That said, some corporations worry about having fewer chances to speak frankly with civil servants.

Asia300

Lotte Shopping Co., Ltd.

South Korea

Market(Ticker): KRX(023530)
Sector:
Industry:
Retail Trade
Department Stores
Market cap(USD): 5,290.74M
Shares: 28.12M
prev link

Politics & Economy

New Zealand's tech industry boots up
next link

Politics & Economy

China's gift of pandas to Indonesia is nice, but not enough

Get Insights on Asia In Your Inbox

To read the full story, Subscribe or Log in

Get your first month for $0.99

Redeemable only through the Subscribe button below

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

Resubscribe now to continue reading.
BEST OFFER:
Only US$ 9.99 per month for a full-year subscription

To read the full story, Subscribe or Log in

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

We could not renew your subscription.
You need to update your payment information.