The money is intended to bribe foreign officials to win
tenders and contracts.
Kim Woo-chung, Daewoo's former chairman, is at the center of a
massive scandal involving dozens of his company's executive, some of
whom ended up in prison. He stands accused of diverting a whopping
$20 billion to an overseas slush fund.
A mind boggling $10 billion were alleged to have been used to bribe
Korean government officials and politicians. But his conduct and
even the scale of the fraud he perpetrated may have been typical to
Korea's post-war incestuous relationship between politics and
business.
In his paper "The Role of Slush Funds in the Preparation of
Corruption Mechanisms", reprinted by Transparency International,
Gherardo Colombo defines corporate slush funds thus:
"Slush funds are obtained from a joint stock company's finances,
carefully managed so that the amounts involved do not appear on the
balance sheet. They do not necessarily have to consist of money, but
can also take the form of stocks and shares or other economically
valuable goods (works of art, jewels, yachts, etc.) It is enough
that they can be used without any particular difficulty or that they
can be transferred to a third party.
If a fund is in the form of money, it is not even necessary to refer
to it outside the company accounts, since it can appear in them in
disguised form (the "accruals and deferrals" heads are often
resorted to for the purpose of hiding slush money).
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