The South Korea government has now postponed the decision on re-awarding the contract to build and operate the country’s second cellular telephone network until President Roh Tae-woo leaves office in February, Communications Minister Song Eon-jong said on Friday. But according to Reuter, businessmen and bankers said the government would be unable to shelve the row surrounding the affair and might have difficulty repairing South Korea’s business reputation. The controversy was over the fact that the son of the chairman of the Sunkyong Group, which leads the Taehan Telecom Ltd consortium, is married to President Roh’s daughter. The Taehan consortium consists of GTE Corp, Vodafone Group Plc, Hutchison Telecommunications Ltd and 12 other domestic companies. Vodafone said it was disappointed but thought the decision wasn’t final, and a Sunkyong spokesman said the company hoped to rally its partners and persuade them to re-bid for the contract after Roh steps down. It’s too early to take any action, said Stephen Estes, managing director of Hutchison Telecom in Seoul. We’re still in the process of collecting intelligence. He played down talk of legal action, which had been canvassed in the Hong King press, but said he hoped the contract could be separated from the political process. Western businessmen in Seoul said it was impossible to separate business and politics in South Korea. GTE’s president Terry Parker described government pressure on Sunkyong to relinquish the licence and re-apply during the next presidency as blatant political actions. In an August 25 letter to Taehan Telecom president Son Kil-seung, Parker said: To give up a lawfully awarded licence would be detrimental to all parties concerned. This cannot be allowed to happen. This turn of events is not only damaging to each of the consortium members both in Korea and elsewhere, but also damaging to the credibility of Korea in the international market place. He warned that GTE may lobby Washington for government-level assistance. Legal action is a risky option, a western lawyer in Seoul said, because local courts are generally reluctant to side with a foreign company against a Korean company he said. Bankers said the political stakes were too high to expect the government to do another about-face and return the contract to Taehan. Kim Young-sam, the ruling Democratic Liberal Party’s presidential nominee, had urged Roh in vain to refrain from awarding the contract during his final months in office. Roh is barred by the constition from seeking another term in the elections.
