South Korea's Watergate Financial-political scandal: America's Asian ally needs to clean up its act to merit respect.

November 20, 1995

UNRAVELING IN SOUTH KOREA is scandal on a grand scale -- a Watergate involving presidential criminality and financial corruption of S&L proportions. Former President Roh Tae Woo is in jail, facing indictment for operating a $650 million slush fund fed by bribes he took from industrial magnates. He might soon be joined by some of the CEOs deeply involved in a government-business network that, through fair means or foul, has propelled South Korea into eleventh ranking among the world's economies.

For the United States, this has to be a cause of real concern. The U.S. went to war to defend South Korea in 1950, then spent heavily to put it on the road to prosperity. More than 30,000 American troops are still stationed there, a living trip wire should Communist North Korea attack or resume its effort to become a nuclear power. Bilateral trade is flourishing.

As April elections approach, the probe will be a defining test for President Kim Young Sam, whose denial of taking $100 million from his predecessor during his 1992 campaign is widely disbelieved. Even the chief opposition leader, Kim Dae Jung, has admitted he got $2.6 million from Mr. Roh in the same election.

Mr. Roh, despite his undoubted role in moving his country toward civilian-controlled democracy, is really part of an old tradition involving military domination of a government deeply involved in all phases of big business. Reformers seek the emergence of a genuine private sector as one of the remedies to excessive government power. But the question troubling the Korean people is whether such a transition can be made without economic decline.

It is a sign of South Korea's coming of age, politically, that this is one scandal that cannot be turned off. Public prosecutors have implicated the chairmen of Daewoo and Dong-ha, heads of two of the largest "chaebols," or conglomerates, and more than 30 other top business leaders have been questioned. Mr. Roh, in saying "I'm responsible for everything," may in fact be trying to protect his partners in corruption lest they "lose their international competitiveness."

Actually, South Korea's reputation would be enhanced if it cleans up an act that has been suspect for a long, long time. The line between exchanging favors and giving or taking bribes may be blurred in many societies. But the line exists, and it is South Korea's task to see that it is defined and enforced.

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