The year 1995 saw the emergence of a corruption scandal in Korea that resulted in convictions of three of the nation's former presidents, jail sentences for numerous businessmen, and the early retirement of a number of military officers. Although it was revealed during their trials that Chun Doo-hwan and Roh Tae-woo had amassed over one billion dollars, many suspected that the actual amount was far higher. Indeed, woven into the story of Korea's economic success is an underside of systematic influence peddling and money politics, and both reflect substantial continuity in the institutional foundations of pre- and post-1987 South Korean politics. The 1995 scandals raise a number of questions, including, Why has corruption occurred so regularly in both Korea and the Philippines? Why has it taken the form it has?

In this chapter we turn our attention from the institutions of governance to the larger institutional environment. The series of institutional changes made under the Park Chung-hee regime (1961–1979) is often used as the starting point of Korea's high-growth era. Yet the Park regime was hardly depoliticized, and in fact money politics was pervasive. Not only was corruption extensive, but political connections overrode economic criteria and allowed for overcapacity and bailouts of indebted and poorly managed firms.