'Revolving Door' Appointments Raise Eyebrows

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'Revolving Door' Appointments Raise Eyebrows

Still asserting its power over the banking industry, the government is culling its own ranks to fill important posts of bailed out banks.Both Hanvit Bank and Kwangju Bank, which will be put under the control of the planned government-led holding company, appointed retired senior government officials as their auditors during shareholders meetings Monday.

Hanvit named a former finance ministry official, Park Jin-gyu, as its chief auditor. Kwangju appointed a former director-level official of the Financial Supervisory Service, Yang Dong-hyuck, to its same post. "Moves like these were inevitable for the government to find ways to resolve the banks' management inefficiency problems," a government official said.

Chohung Bank, which also received government bailout funds, is expected to appoint a vice chairman of the Financial Supervisory Service, Kim Sang-woo, as its auditor during its shareholders meeting Friday.

With an equity investment in Korea Exchange Bank, the Bank of Korea is recommending its banking institution department director for the auditor post of Korea Exchange, whose shareholders will meet March 16.

A commercial bank official condoned, then criticized, the moves. "For state-owned banks like the Korea Development Bank, the finance minister has the power to appoint officials to top posts, so ministry officials have held high positions in these banks for a long time," he said. "But just because commercial banks receive the support funds doesn't give the government justification to overextend its authority."

A government official responded that "these public officials can put their experience to good use by running the banks."

But observers say that the government should refrain from placing staff whose managerial ability is untested in high positions in the banks. "These unsound administrative changes will hurt the government's ability to monitor the banks' operating activities, and the banks will have difficulty beefing up their internal controls to prevent wrongdoing like embezzlements," said a senior researcher at the Korea Economic Research Institute, Lee In-sil.




by Kim Won-bae / Oh Jung-hee

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