In September 2016, South Korea’s Improper Solicitations and Graft Prohibition Act, better known as the “Kim Young-ran Law,” came into effect. The Kim Young-ran Law, regarded by some as the strictest anti-graft law in the world, included important provisions aimed at combating Korea’s deep-seated gift-giving culture that infested the public sector and cultivated corruption (including, for example, the corruption blamed for the 2014 Sewol ferry disaster, as well as the scandals that ultimately led to the impeachment of former President Park Geun-hye in 2017). The law’s provisions on gifts ban public servants, educators, and journalists from receiving free meals worth over 30,000 won ($28), gifts over 50,000 won ($46), and congratulatory or condolence money over 100,000 won ($92)—the so-called “3-5-10” restriction.
Although a majority of the Korean public believes that the Kim Young-ran Law has been effective in reducing bribery, the restrictions on gifts were widely perceived as too strict, with almost two-thirds of surveyed Koreans supporting an amendment that would loosen the 3-5-10 thresholds. In light of this, in December 2017 the legislature revised the law to double the price limits on gifts for agricultural, livestock, and fishery goods to 100,000 won, and to reduce the allowance for congratulatory or condolence money to 50,000 won—so, it’s still a “3-5-10” restriction, though the “5” and the “10” have flipped. However, scholars are concerned that even this alteration of the original rules would set a precedent for changes and exceptions that would defeat the initial spirit and purpose of the Kim Young-ran Law. Indeed, the arguments for relaxing the gift limitations do not withstand scrutiny; it was likely a mistake for South Korea to give in to pressure to amend the law, and it would certainly be a much graver mistake to relax the 3-5-10 thresholds further. Those who believe that the Kim Young-ran law’s limits on gifts are too stringent have advanced three major critiques, but none of them is persuasive:
- First, opponents of the 3-5-10 restriction on gifts have argued that the law’s sweeping prohibitions fail to distinguish adequately between legitimate gifts from friends or relatives, versus improper inducements offered as a way to influence the recipients’ official decisions, and that the law therefore interferes excessively with the personal lives of those subject to the 3-5-10 rule. However, the nature of the work of those governed by the Kim Young-ran Law—namely public servants, educators, and journalists—justifies such interference, especially given that in these fields even the appearance of corruption is a significant problem. Moreover, the 3-5-10 law does not deprive those covered from receiving anything from their friends or relatives; it just sets price thresholds. True, those thresholds are quite stringent, but fighting graft is such an important priority in South Korea, and the risks that even “personal” gifts might be used to curry favor are sufficiently high, that these strict limits are necessary. After all, friends and relatives are no less willing than other people to offer gifts and free meals when they realize someone they know have the authority to issue the permit they need, to admit their children to their dream schools, or to give them the publicity they want.
- Second, some critics of the law argue that in Korea gifts are often given as an acknowledgment of the recipient’s status (rather than as a bribe), and the Kim Young-ran Law’s strict restrictions on gifts are therefore incompatible with Korea’s “cultural reality.” But the point of the law is to change this cultural reality, at least insofar as it impedes the fight against corruption. In practice, it is difficult to ascertain the true purpose behind giving a gift, and (as noted above) even if a lavish gift that is not intended as a bribe, it can still create the appearance of corruption, undermining public confidence in the fairness and legitimacy of the system. So, yes, these limits on gifts are incompatible with practices that were considered acceptable in the past—but that’s a design feature, not a flaw.
- Third, some have argued that stringent gift restrictions will hurt certain sectors of the economy—a complaint heard most from those industries most directly affected by the precipitous drop in spending on gifts and entertainment, such as the food and beverage industry. It is indeed true that anti-graft efforts can have adverse effects on certain industries: China’s anticorruption campaign, for example, has impacted the luxury goods market, as well as Macau’s gambling industry. But that’s a price worth paying for reducing corruption, in China, South Korea, and elsewhere. Moreover, as some commentators on the impact of the Kim Young-ran Law have pointed out, the prices of such popular gifts as flower and Korean beef were “artificially high to begin with,” and that in the long run these businesses “will find ways to meet normal consumer demand.” Indeed, after several years of stagnancy, China’s spending on luxury goods is growing steadily again, thanks to affluent consumers coming from the rising middle class. While South Korea might not share China’s political and economic structure, China’s example demonstrates that the market is capable of conforming to a landscape reshaped by a new policy. Given the importance of reducing corruption in South Korea, it makes more sense for those industries that sell popular gifts to adapt to the new anticorruption law than to adapt the anticorruption law to accommodate those industries.