Murky web of relations seen between public sphere and private firms
Korea's current Public Service Officials Ethics Code prohibits civil servants with pay grades higher than level IV from working in their job-related fields for two years after their retirement. However, this rule is not a hindrance to high-ranking officials seeking work as advisors at law or accounting firms. This is because the law stipulates the restricted areas for their employment as companies with start-up capital of over 5 billion won and annual turnover above 15 billion won. Law firms and accounting firms, by their nature, do not require much start-up capital. Accordingly, these firms have turned into the most favored 'retirement destinations' for former top Korean officials. Unfortunately, these former government officials are often the behind-the-scenes powerhouses of these firms. For example, Kim & Chang, which legally represents Lone Star, the American fund that was slammed with a 140 billion won (US$145 million) penalty tax from the National Tax Service (NTS), ironically, is full of people from NTS. These people include Choi Myeong-hae, former head of the NTS Tax Tribunal; Choi Byeong-cheol, former NTS international tax policy coordinator; Seo Yeong-taek, former head of NTS, and Hwang Jae-seong, Lee Ju-seok, Jeon Hyong-su, all former heads of NTS Seoul office. In 2003, NTS imposed a 15 percent income tax for chiefs of foreign life insurance companies in Korea, including MetLife Co. and Prudential Co. It was a result of its investigation into their taxes and its determination that their then income tax rate of 1 percent was terribly unfair. But NTS soon retreated this decision after the two firms filed a request for the delay of judgment on propriety before tax-levying. At that time, again Kim & Chang was Prudential's legal representative.A ranking official with the government points out: "It is clear that there is a symbiotic relationship between former and incumbent government officials, [in that they have formed] a special group that exchanges favors. Given the seriousness of the matter, Korea should either enact a lobbyist law, similar to that of the United States, or completely ban former government big shots to assume 'advisorships' at law and accounting firms and [make them] actually work officially as lobbyists. In 2004, the Korean Bar Association in 2004 discussed the possibility of requiring law firm advisors to register as official employees of these firms. But the discussion was shut down by strong protests from law firms.
