hankyoreh

The recent arrest of National Tax Service head Jun Gun-pyo on bribery charges provided a glimpse into how corrupt the nation’s tax authorities are, observers say. The bribery case highlighted two types of corruption going on at the organization. First, it confirmed the open secret that tax evasion is possible to some extent by lobbying tax officials through bribery. Second, evidence from the case has shown that some portion of the money frequently ends up in the hands of superior officials.

The NTS denies the allegations, and said, “All of those things are history.” Since 1999, the tax agency has carried out organization-wide reforms by removing officials in charge of local areas, a move which it claims helped root out such corruption.

One tax official confirmed that in the past it was common practice for local companies to offer bribes three to four times, especially on major holidays, but noted that the practice has now disappeared and this kind of corruption was just an isolated case.

However, this kind of argument does not seem to hold true in Jun’s case, in which Chung Sang-gon, the former chief of the Busan Regional Tax Office, regularly paid bribes even before he received 100 million won from a local businessman for business favors and after the organization’s personnel reshuffle was complete.

Prosecutors also think that Jun’s case has the hallmark of old, inside practices. Though it is nothing like it used to be, experts say that bribery and sharing of corrupt money is likely par for the course.

Taking bribes in connection with tax audits also seems to be rampant, though NTS officials have denied it. An official said, “We are incapable of preventing this kind of corruption between public servants and company officials in the process of tax investigations.”

Taxpayers, however, tell a different story. An accountant who works with small businesses and self-employed people said, “My experiences have shown that money mostly solves all of my problems,” adding that about 20 percent of the tax charged is paid to officials following tax investigations.

One small to mid-sized company owner said, “We usually grease the relationship with local tax officials by playing golf and having dinner together.” He added, “With such good, long-standing relationships, sometimes we ask favors in connection with taxation as far as it doesn’t put too much of a burden on them.”

Samsung’s former legal representative and whistle blower Kim Yong-cheol recently confirmed that money paid to tax executives had one more digit than that given to prosecutors. Earlier this week, Kim alleged that Samsung is keeping slush funds in accounts opened in the names of some of its top executives and that the money was used to pay off people working in a wide range of civil-service sectors, including the government, the judiciary and the tax service.

Civic groups demanded that the NTS reform itself. The People’s Solidarity for Participatory Democracy issued a statement on Wednesday in which it called for prosecutors and state auditors to launch a comprehensive investigation into the organization.

Please direct questions or comments to [englishhani@hani.co.kr]