CPJ concerned about South Korean government investigations of local media companies

New York, September 17, 2001—The Committee to Protect Journalists (CPJ) is monitoring events in South Korea with some concern, as the government’s crackdown on alleged financial wrongdoing by the country’s major media companies is likely to have profound implications for local journalism.

Despite President Kim Dae-jung’s international reputation as a champion of democracy, capped in 2000 with his receipt of the Nobel Peace Prize, he has long had a contentious relationship with the press at home. So when police arrested three top media executives in mid-August on charges of tax evasion and embezzlement, many characterized the move as an attack on the independent press.

On September 4, the Seoul District Prosecutor’s Office formally indicted the three executives and 10 others on charges of tax evasion. The indictments followed a months-long National Tax Service audit of South Korea’s largest media companies, the most extensive audit of a single industry under the Kim administration. Twenty-three media companies currently stand accused of tax evasion. If convicted, they could be forced to pay back taxes and fines totaling over 505.6 billion won (US$393 million).

While the administration denies that the massive tax probe was politically motivated, some newspaper executives say it is no coincidence that the media companies most skeptical of President Kim and his Sunshine Policy of engagement with communist North Korea have been among those hardest hit by the audits. “The motivation behind this investigation is to muzzle the Big Three papers, because they are critical of the president and his policies,” Kim Young-hie, vice president of JoongAng Ilbo, told The New York Times.

The “Big Three” are Chosun Ilbo, JoongAng Ilbo, and Dong-A Ilbo, and together they control about 70 percent of the country’s newspaper market. Their sheer size made them liable for larger fines. State broadcasters and the liberal newspaper Hankyoreh, which has been a longtime supporter of Kim Dae-jung, were also fined.

A parliamentary committee was established to investigate the fairness of the investigations, but its work has been slowed by other political crises. On September 3, the National Assembly passed a motion of no confidence in a senior cabinet minister, resulting in the mass resignation of Kim’s entire cabinet.

The two events are not unrelated. The steady drumbeat of bad press has certainly contributed to a steep decline in President Kim’s approval ratings, and legislators capitalized on widespread public disenchantment to push the no-confidence motion.

The opposition Grand National Party has joined the embattled newspaper owners in accusing the government of mounting a poorly disguised attack against the private media as an institution. On the other hand, many journalists and civil society groups have been outspoken in their defense of the tax probe, arguing that the domestic media business is rife with corruption and in need of a complete structural overhaul. Yet even supporters of the audits agree that going after South Korea’s powerful media tycoons has obvious political repercussions, and may ultimately transform the journalism industry. CPJ will be watching to ensure that press freedom is not compromised in the process.


January 11, 2001—During his New Year’s press conference, President Kim Dae-jung stated, “It is incumbent upon the news media to practice fair and balanced reporting with responsible criticism. We are aware of the high level of public demand for reform of the news media. I believe all of us, media, academia, citizen groups, and the National Assembly, should join hands in efforts to transparent and fair reform measures for news media.” Though government spokesman Park Joon-young later told journalists that the president favored voluntary reform measures, domestic media reports expressed some apprehension about Kim’s remarks.

February 8—The National Tax Service launched a major audit of 23 media companies in what authorities conceded was the most extensive investigation of any single industry during Kim’s administration.

February 12—The Fair Trade Commission began a separate audit into the business practices of 13 newspapers and three major broadcast outlets.

April 13—The Regulatory Reform Committee, composed of seven government officials and 13 academic and civic group leaders, announced its decision to revive guidelines regulating newspaper marketing and distribution. Committee members said the regulations, which were dropped by Kim’s administration in January 1999, were needed to curb unfair business practices.

June 20—The National Tax Service released the results of its four-month probe, announcing that 23 media companies would be fined a total of 505.6 billion won (US$393 million).

June 29—At a rally held by the Korean Federation of Press Unions and a non-governmental pressure group called People’s Action for Press Reform, activists announced the June Declaration for Media Reform. The declaration stated that “the freedom of journalism belongs not to privileged media companies or journalists but to the people,” and supported the audits as long as they were conducted in a transparent manner. The groups added that they would “strongly resist any government bid to control the media.”

August 16—Government prosecutors petitioned the Seoul District Court to approve warrants for the arrests of five media executives accused of large-scale tax evasion and embezzlement.

August 17—The Seoul District Court issued arrest warrants for three media owners on charges of tax evasion and embezzlement, but cited insufficient evidence in rejecting prosecutors’ requests for the arrest of two other executives. The three owners were arrested the same day, and have been held without bail while awaiting trial. They are: Bang Sang-hoon, president and owner of Chosun Ilbo, Korea’s biggest-selling newspaper; Kim Byung-kwan, principal owner and honorary chairman of Dong-A Ilbo; and Cho Hee-joon, controlling shareholder of Kookmin Ilbo, a smaller newspaper owned by the Full Gospel Church. Hearings in the cases of Bang and Kim are scheduled to begin on October 24; Cho’s trial is due to start on October 28.

August 20—The ruling and opposition parties agreed to establish a special parliamentary committee to investigate the government’s audits into the tax and trade practices of 23 major media companies. The committee will be composed of 10 lawmakers from the opposition Grand National Party, eight from the ruling Millennium Democratic Party and two from the splinter United Liberal Democrats.

September 3—The National Assembly passed a vote of no confidence in Unification Minister Lim Dong-won, the principal architect of the president’s Sunshine Policy of engagement with North Korea. The United Liberal Democrats (ULD), which had been an ally of the ruling Millennium Democratic Party, voted with the opposition—splintering the ruling coalition and prompting a cabinet reshuffle.

September 4—The Seoul District Prosecutor’s Office formally indicted three newspaper owners, who have been detained since August 17, as well as ten media executives also accused of large-scale tax evasion. The ten others indicted have not been detained; they have been identified by Chosun Ilbo as:
-Bang Kye-seong, managing director of Chosun Ilbo
-Kim Byung-keon, former vice president of Dong-A Ilbo
-Song Pil-ho, vice president of JoongAng Ilbo
-Lee Jae-hong, head of the management office of JoongAng Ilbo
-Chang Jae-keun, former president of Hankook Ilbo
-Lee Tae-soo, chief of business support division of Daehan Maeil
-Chung Tae-shik, Daehan Maeil
-Kim Moon-jin, Daehan Maeil
-Kim Hak-kyun, Daehan Maeil
-Kim, accountant of Daehan Maeil