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Scandal Provides Opportunity, Danger for South Korean President

October 31, 1995

SEOUL, South Korea (AP) _ A political scandal involving a $650 million slush fund offers President Kim Young-sam a chance to reassert himself and reverse a long slide in popularity.

But it also places him in danger of being dragged into a spreading morass that has already enveloped a former president and could further fracture a cracked political landscape less than six months before parliamentary elections.

Former President Roh Tae-woo last week tearfully admitted that he hoarded a staggering $650 million in political contributions as president in 1988-93 and says there’s only $238 million left.

He has been summoned for questioning on Wednesday, the first time the government has taken formal action against a former leader for improper behavior.

If Roh were to be arrested and tried, a chill would run through South Korea’s biggest companies, 50 of which have been implicated in giving him money. They could face bribery charges and international discreditation.

The South Korea composite stock price index has dropped 23 points to 980 since the affair began to unravel Oct. 19.

Politicians and businessmen have been scurrying to take advantage of, perform damage control on or avoid getting splattered with the muck that’s being raked with growing fervor.

For Kim and his party, the stakes are simple: Handle the scandal well to get a boost in April elections and nourish a budding but tenuous public trust in government after decades of military-backed administrations.

Or bungle it and face another humiliating defeat that could linger until the ’97 presidential campaign, and leave a cynical public even more jaded.

The convoluted scandal involves allegations that Roh used the slush funds to help two opposing candidates in the 1992 presidential election, and that he took kickbacks as well as dispensing favors to those who helped him launder the money.

The saga says a lot about the way business used to be done in South Korea _ and sometimes still is _ and the long, painful process needed to clean it up.

It used to be that a company seeking a big government contract knew the path would be littered with officials’ demands for bribes and kickbacks. The political proceeds were stashed away in bank accounts under pseudonyms.

Kim won the 1992 election, and a hallmark of his campaign was a promise to root out corruption. He managed to outlaw the fake-name accounts that were commonly used to launder ill-gotten gains.

But Kim has often been disappointed as graft has continued to sprout. During this scandal, he has been trying to sound presidential, using strong language to deny personal involvement and vow a thorough investigation.

The Roh case provides a perfect opportunity to set an example, but Kim finds himself walking a tightrope to come up with the right punishment.

Should he allow a compromise like the one for Roh’s predecessor, Chun Doo-hwan, who admitted a year after leaving office in 1988 that he had slush funds and was forced to apologize, pay millions of dollars in fines and spend a year at a Buddhist monastery in exile.

Or should he push for something harsher, perhaps even a jail term? The amount of money involved in Roh’s case is 33 times larger.

Kim has promised a fair investigation, though the opposition claims that’s impossible because he is tainted.

South Koreans are so jaded that few believe that Kim wasn’t involved, despite his claims of innocence: ``I am clean. I have never been involved.″

If he were tainted, the biggest impact would be on his party, which suffered a devastating loss in local elections in June and faces more of the same in April’s National Assembly races. Kim is serving a non-renewable five-year term.

The scandal could even lead to a split in the party, which is increasingly divided between supporters of Kim and supporters of Roh.

Kim has long been unhappy with the marriage, with reports he might court ``untainted″ younger politicians to join. He already has said a member of the new generation should be the next president.

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EDITOR’S NOTE _ Paul Alexander, based in Seoul, is the AP’s Chief of Bureau for South Korea.

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