Ex-Official Might Have to Pay for S. Korea’s Economic Woes

Should government officials be held criminally responsible if an economy collapses on their watch, even if their “crimes” amount to misjudgment at best?

That is the question being deliberated by a South Korean court considering charges against former Deputy Prime Minister Kang Kyong Shik. It would be comparable to Treasury Secretary Robert E. Rubin being put on trial if the U.S. economy were to go bust suddenly.

The South Korean government has charged Kang with abuse of power and gross negligence, essentially for failing to prevent the economic collapse that precipitated the country’s humiliating $57-billion bailout by the International Monetary Fund last December. “He neglected his duties as deputy prime minister at a time when his duties were needed,” said Park Joo Son, the top legal advisor to President Kim Dae Jung.

Kang, who maintains his innocence and says he was dedicated to his job, spent 101 days in jail before his release on bail in September. If convicted, he faces up to five years in prison.

The causes behind the country’s economic downfall would be reviewed more appropriately in a congressional hearing room than a criminal courtroom, Kang said in an interview.

The charges could presage similar cases across the region as angry citizens seek someone to blame for the economic tailspins that led to losses of tens of thousands of jobs and businesses. Nevertheless, many experts say such cases would be tilting at windmills: Preventing economic crises may be beyond any individual’s power in this age of lightning-fast international capital and information flows, where a currency or stock market can collapse almost instantly.

“There’s no one person who is responsible for the market--there’s no prime minister, no secretary of treasury, no rating agency, no securities analyst,” said Toyoo Gyoten, an international financial guru recently appointed special economic advisor to Japan’s prime minister, Keizo Obuchi.

Kang has not found a lot of sympathy among South Koreans, where the IMF is synonymous with economic hardship, including thousands of layoffs and bankruptcies. An estimated 30,000 people rallied in Seoul on Sunday demanding that the government punish those responsible for ruining the nation’s miracle economy. South Korea was pushed to the brink of bankruptcy late last year as the government came perilously close to running out of foreign exchange reserves while fighting to maintain the value of its currency, the won.

Justice Ministry official Moon Jung Woo contended that Kang “should bear full responsibility as the country’s top economic policy expert.” Kang, who was ousted just before the IMF bailout, is accused of failing to adequately brief then-President Kim Young Sam or Kang’s successor as deputy prime minister about the situation.

The charges against Kang have infuriated the opposition Grand National Party, which was in power at the time of the crisis, and have sent a chill through the government. Kim In Ho, the former senior secretary for economic matters, is facing similar charges.

Rallying in their support are 20 former senior government officials, including prime ministers and Cabinet officials, who petitioned the court’s three-judge panel. The former officials voiced alarm that criminalizing policy decisions might deter would-be civil servants and be “undesirable for the future of public service in this country.”

“It would be one thing if the deputy prime minister made significant and intentional mistakes that imperiled the government and placed it at risk,” said Lee Hoi Chang, leader of the Grand National Party. ‘But to imprison somebody on charges of misjudgment is simply scapegoating.”

It is ironic that the U.S.-educated and reform-minded Kang is charged with failing to prevent the economic collapse, considering that many of his policy recommendations have been adopted in the new administration.

One element that precipitated the charges was a presidential aide’s allegation that until late last year President Kim Young Sam, to whom Kang reported, did not seem to be aware of the seriousness of the financial crisis or the imminence of the IMF rescue. Kang’s attorney suggests that the former president simply might have feigned ignorance to keep the politically explosive bailout secret. In fact, the attorney claims that the former president stated in a deposition that he was fully apprised of the crisis.