Keep your word, President ParkIn 2004, as Park Geun-hye stepped onto the mound as relief pitcher for the opposition Grand National Party due to the backlash against its motion to impeach President Roh Moo-hyun, she made a variety of promises about saving the conservative party from crisis. Among them was a pledge to enforce the blind trust system for public officials and make their assets public knowledge. She vowed to seek legislation that would obligate legislators and government officials above vice-minister level to entrust all their real estate and equity assets to designated financial institutions so that they will be strictly prohibited from increasing their wealth while serving in influential public offices.
She solemnly announced a 15-point action plan while forming her conservative camp ahead of the April 15 legislative elections. Since then, only equity shares have come under the blind trust system.
The party and its chief who sought the constraint are now the ruling party and the president. They are poised to change the regulation because Hwang Chul-joo, who was named chief of the Small and Medium Business Administration, withdrew from the nomination because he couldn’t agree to the trust requirement. The ruling party also floated the idea of changing the confirmation hearing system after President Park criticized the preoccupation with personal background and wrongdoing in the hearings after Kim Yong-joon withdrew from his prime minister nomination. Blaming the system for the party’s appointment incompetence does not look good for the government or the party. They’re holding the system responsible for holes in their recruitment and vetting process.
The government’s proposal to replace the blind trust with a common trust system aimed at stopping officials from using their influence to increase their wealth is in principle not a bad idea. The government suggests that the grantor’s voting rights over the equity assets under trust be removed once he or she takes a government post. Gains would have to be donated to society. But there are no regulations specified for when the trust contract ceases. In accordance with the public official ethics law that prohibits retired officials from securing jobs in the private sector for two years, they would also have to be restrained from selling the trust assets for two years after leaving their government posts.
But there are more important issues to settle before revising the regulation. President Park has always emphasized “principles and trust.” So she should not break her own promise.
In order to honor the essence of the president’s earlier promise, the government would have to propose increasing the number of senior public officials required to submit to trust management to prevent conflicts of interest. It would be best if we follow the example of Canada, which requires those running for or taking public office to relinquish all of their shareholdings to trust management. Rep. Chung Mong-joon of the Saenuri Party owns 3 trillion ($2.7 billion) won worth of shares in Hyundai Heavy Industries, but he has been exempted from the blind trust requirement because the shares were deemed unrelated to his line of work. But it is a general fact that politicians and senior government officials wield omnipotent influence regardless of their field.
Second, real estate trust management is as important as that for shares. Nominees for senior government posts are frequently grilled over suspicious real estate profits during their confirmation hearings. Real estate properties officials aren’t actually living in or using should fall under the trust requirement just like equity shares. If the president ignores these urgent revisions and instead moves to ease the blind trust regulation, her signature slogan of principles and trust would lose credibility. The government and ruling party would also face the criticism that they are serving the president rather than the people.
If real estate assets are included in the blind trust system, fewer candidates would back away from their nominations during confirmation hearings due to allegations of real estate speculation. Real estate not actually being used should be put into a blind trust, with the value set at the lower of two amounts - either the amount of money that initially went toward the property plus the interest that would have accumulated, or the market value of the property at the time the trust is created. The assets will be returned with interest at the end of the agreement. If candidates were sincere about having purchased real estate without the intention of increasing their wealth, they should not complain about the arrangement. If candidates accept the terms, public criticism about suspicious real estate trade, including bogus moves aimed at getting illegal access to benefits, would be less harsh.
*The author is a professor at Kyungbook National University.
By Kim Yoon-sang