South Korean President Park Geun Hye returns from 12 days abroad Monday facing a government shaken by a widening corruption scandal that may topple the country’s second prime minister in a year.
Among the decisions awaiting the president after her Latin American tour is whether to accept Prime Minister Lee Wan Koo’s offer to step down amid allegations he received 30 million won ($28,000) from a local businessman. Lee offered his resignation April 20 after prosecutors began investigating the claims, which the businessman made in a newspaper interview before he was found hanged from a tree in northern Seoul.
The scandal is yet another setback for a South Korean government that has struggled to find stability and energize the economy since a ferry disaster last year killed more than 300, mostly young, passengers. Park also must contend with a special election for four National Assembly seats Wednesday, a potential bellwether for next year’s parliamentary poll.
Lee, who has denied taking the money, was Park’s third pick for prime minister after Chung Hong Won resigned from the post in the aftermath of the Sewol sinking and two other candidates withdrew their names. He announced a sweeping anti-corruption campaign weeks after his confirmation in February.
“Lee’s involvement in the bribery case seriously undermines the administration’s credibility,” Firat Unlu, Asia analyst at global risk adviser Verisk Maplecroft in Bath, the U.K., said in an e-mail. “This diminishes the little political capital Park has to push through necessary structural economic reforms.”
Park has sought to cut regulation, lower taxes and reduce small businesses’ dependence on sprawling, family-owned conglomerates such as Samsung Electronics Co. Her goal is to return the economy to a growth rate of 4 percent by 2017.
Bank of Korea Governor Lee Ju Yeol on April 9 lowered the central bank’s forecast for gross domestic product growth this year to 3.1 percent from an estimate of 3.4 percent in January. The economy grew 2.4 percent in the first quarter, the Bank of Korea said Thursday, rebounding from its slowest expansion since 2009 in the previous three months.
The allegations against the prime minister emerged just as Park was preparing to attend a memorial for the anniversary of the Sewol disaster and depart for her trip to Colombia, Peru, Chile and Brazil. The source was a note found April 9 with the body of Sung Wan Jong, the head of Keangnam Enterprises.
The note included the names of eight Park political allies, including Lee, followed by six numbers believed to be monetary amounts. Hours before his death, Sung had told the Kyunghyang Shinmun newspaper that he had in 2013 given money to Lee, who was then running for a National Assembly seat.
Sung also told the paper he gave 200 million won to a senior aide to Park’s 2012 presidential campaign. The note listed a name identical to Park’s chief of staff, Lee Byung Kee, someone he didn’t speak in detail about in the Kyunghyang interview.
A special team of prosecutors under Justice Minister Hwang Kyo Ahn is investigating the case.
“The memo about eight people is the starting point, but the investigation won’t be limited to particular people singled out by a particular person,” Hwang told an April 20 parliamentary hearing. “This is the time to conduct a comprehensive review of illegal political funds coming and going in the political circles.”
Park has said she supports a thorough investigation. The president doesn’t want the scandal to “divide the nation” and slow her economic agenda, her spokesman, Min Kyung Wook, said in a televised briefing last week.
The president’s approval rating rose 1 percentage point last week to 35 percent, Gallup Korea said Friday. Her support fell to a record low of 29 percent in January after allegations that a former aide attempted to influence the decisions of her office. Prosecutors concluded those claims were unfounded.
The new graft case undercuts efforts by Park’s Saenuri Party to pick up four National Assembly seats formerly held by a minority party disbanded for supporting North Korea. A strong showing by the New Politics Alliance for Democracy could give the opposition party a boost ahead of next year’s vote.
“Lee’s resignation offer was the best option possible to minimize repercussions from the scandal,” Hwang Tae Soon, a political analyst at the Wisdom Center in Seoul, said by phone. “It may help unite conservative voters in the by-elections.”