Press More for Public Sector Reform

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Press More for Public Sector Reform

It has come to light that five representative Korean public corporations, including Korea Telecom and Korea Electric Power Co., extended unfair assistance to their affiliates totaling 1 trillion won ($781 million) and were slapped with 40 billion won in penalties. After the Fair Trade Commission probe into unfair internal transactions last year, the four largest Korean conglomerates, whose ultimate goal is maximizing profits, were slapped 44 billion won in penalties, giving rise to public ire that conglomerates had not changed. It is unbelievable that the five public corporations ?which are smaller in size and whose top priority is supposed to be public service ?have rung up similar amounts of illegal internal transactions. Also, their methods of support come as a surprise: These public firms took over corporate bonds and papers issued by their affiliates at low interest rates or they awarded private contracts to their affiliates at inflated prices.

We are not completely for the investigation of unfair internal transactions by the commission. It has the danger of lumping discounts for longterm transactions and higher prices aimed at maintaining quality together in the category of unfair transactions. The holes in its logic are glaring as well; for instance, it is not considered an internal transaction if an affiliate is merged with a parent company and transactions are made as units within the same company. We would like to point out that little progress has been made in public sector reform. Layoffs, evaluated as the biggest success by public firms, have been concentrated on lowerechelon jobs such as contract positions. Most of the layoffs were shams ?temporary or a mere transfer to an affiliate.

Public corporations?unfair internal transactions are another testament to footdragging public reform. In the first place, public firms, not conglomerates, should have been the primary targets of investigations. While major conglomerates have gone through four rounds of investigations, public firms have just received scrutiny for only the second time. The public sector needs to set an example for private businesses. When the order is reversed is it any wonder that discontent in the private sector mounts?
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