A socialist NPSKwak Seung-jun, chairman of the Presidential Council for Future and Vision, suggested Tuesday a need to strengthen the National Pension Service’s say in decision-making at companies in which it has invested. No one would find fault with the exercising its legitimate voting rights by NPS as a shareholder.
But the backdrop of Kwak’s statement raises issues. He explicitly said the move was aimed at taming big corporations by using the NPS stakes as a means of keeping them in check. We are dumbfounded that Kwak advocates the government using its power to control industrial giants through the NPS stakes, which is a kind of naive belief that corporations are owned by the government.
The owners of the NPS are the people, not the government. Money is paid into the NPS by citizens to prepare for a stable and comfortable retirement. The NPS was established to promote the stability and welfare of the people by providing pension to policyholders, not to achieve the government’s policy goals or to tame big companies. If the government really wants to control private businesses with its financial might, it should first get the consent of the people.
Even the left-wing Roh Moo-hyun administration stopped short of going in this particular direction; it only said the government would exercise its rights in a direction benefiting pension-plan holders when drafting guidelines for exercising its rights in late 2005. Above all, improving corporate governance is a totally separate matter from guaranteeing a better life to citizens.
We also worry about the harmful effects of government control in the private sector. Although a fund operation committee of the NPS exercises its voting rights, the committee is virtually controlled by the government. Even in the cases of companies where the government doesn’t have a stake, the NPS wields a strong influence in selecting top management. As of last year, the NPS hold stakes of more than 5 percent in 139 large companies after investing 55 trillion won, or 17 percent of its assets, in the stock market.
Kwak’s statement is nothing more than a step toward socialism. In an age of fierce global competition, the government’s meddling will seriously harm our economy. Kwak’s statement betrays the Lee Myung-bak administration’s insistence that it is business-friendly. If the government really wants to get involved in the decision-making process of private companies, it should create a system that is immune to government pressure and clout.