South Korean PM quits in tax scandal

The Prime Minister has been under intense pressure to step down since Wednesday when a court ruled he had avoided taxes by entrusting real estate, including land worth $2.63 million in Seoul, to a third person. The court ruled that the trust arrangement, while not illegal at the time, was deliberately designed to avoid taxes and ordered Park to pay 1.3 billion won ($1.2 million) to the tax authorities.

The practice of registering real estate assets in the name of third parties was outlawed in 1997. The tax evasion scandal came to light when the nominal custodian of Park’s property was hit by a hefty tax Bill, which he appealed against. The 72-year-old politician was appointed as Prime Minister in January, succeeding his United Liberal Democrats (ULD) colleague, Kim Jong-Pil, who stepped down to concentrate on party business.

The naming of Park, known here as the Steel King, as the premier had raised hopes that his prowess in economic affairs would accelerate economic reforms. Park, a graduate of the Korea Military Academy and Waseda University of Japan, launched Pohang Iron and Steel Co. (POSCO) in 1968 and built it into one of the world’s most efficient steel makers. POSCO was a major force in South Korea’s rapid industrialization, providing the steel for its key export industries — automaking and shipbuilding. Park emerged as a major political player in 1990 when he was named executive chairman of the then ruling Democratic Justice Party (DJP).

In November 1997, he joined the ULD, which forged an alliance with former dissident Kim Dae-Jung and helped Kim to win the presidential elections. But the political alliance, under which the premiership goes to a ULD member, has been under strain since Kim Jong-Pil was branded as corrupt by civic groups campaigning to clean up public life. The campaign, which involved naming public figures accused of corruption or complicity with former military regimes, has been publicly backed by the president. It has also weakened the ULD’s electoral standing. In parliamentary elections last month, the party won only 17 seats, significantly down from the 50 it previously held in the 273-seat National Assembly.