(News Focus) Slot machine controversy developing into influence peddling scandal

Controversy over "Sea Story," a giant gambling-like video arcade chain, is threatening to develop into a major influence-peddling scandal, as speculations are rife over how the business has thrived in a country where gambling is strictly restricted.

Sea Story currently dominates about 80 percent of South Korea's 20 trillion won (US$20.9 billion) slot machine-style video arcade market, only two years after it opened its first store in 2004.

The arcade bypasses the law by awarding the winners gift certificates instead of cash, as South Korea authorizes only one casino for its nationals, which is located in Jeongseon, an isolated mountain resort on eastern South Korea.

Controversy began to flare over the arcade last week as media speculated that the recent sacking of former Vice Culture Minister Yoo Jin-ryong was linked to his demand for a government body not to approve the sale of Sea Story's slot machines.

The machines were later found to have violated the law, as it allowed gamblers to win up to 2.5 million won in gift certificates at one time, although the maximum winning prize is limited to 20,000 won.

Also coming under scrutiny was a sharp increase in the amounts of gift tickets circulated in those gambling-like sites, which were originally intended to be used to buy books and watch movies, plays and other culture-related performances.

Since July last year, about 6 billion gift tickets worth 30 trillion won have been issued for use in such gambling-like sites, sparking allegations that slush funds might have been created to bribe government officials and politicians.

"It's comical that cultural gift certificates are given out as prizes. Buying a book or watching a play with gift certificates won by gambling?" the mass-circulation JoongAng Ilbo newspaper said in a commentary.

Opposition parties and media agencies openly raised suspicion that government officials and politicians might be behind the explosive growth of the profit-making Sea Story.

Suspicion has also arisen over the alleged role Roh Jie-won, a nephew of President Roh Moo-hyun, might have played as a director of a local firm which was recently taken over by the developer of the Sea Story slot machine. The younger Roh has denied the allegation.

"It is a large-scale political corruption case," said Kim Hyong-o, floor leader of the main opposition Grand National Party (GNP), on Tuesday.

"We can't remove the stigma that our country is the 'republic of gambling' as many people are addicted to gambling and face family break-ups and other difficulties. But President Roh and his ruling party are trying to avoid the case.” President Roh ordered a through probe into the case, saying that he was confident his government was innocent.

The probe "should not leave any lingering questions," Roh told Cabinet ministers on Monday, according to his spokesman Jung Tae-ho. "For the time being, we'll feel difficulties due to various speculations. But when the truth is revealed, the fact that our government is transparent will be proved once again."

The prosecution and the Board of Audit and Inspection have launched separate investigations. Ruling Uri Party members argued that the gambling scandal was a simple fraudulent business practice but was politically exploited by government critics.

"Without concrete evidence, a list of names is randomly circulated linking them with the case," said Noh Woong-rae, a ruling party lawmaker.

The case, if proven to be a scandal, would deal a serious blow to the Roh government whose approval rating has gone down to its lowest level of less than 20 percent. Roh's Uri Party suffered crushing defeats in May's local elections and July's parliamentary by-elections.

Seoul, Aug. 22 (Yonhap News)