Time to cut political-industry ties

The revolving-door beneficiaries of the previous government under President Lee Myung-bak who enjoyed chief executive posts at the country’s major financial holding groups have stepped down or are poised to do so. The government has nominated or is looking for replacements to head the KDB Financial Group, Woori Financial Group and KB Financial Group, where chairmen have already left or are expected to resign. The financial sector is rife with activities seeking to win favor to the point that Financial Services Commission Chairman Shin Je-yoon lamented that financiers are being over-sensitive to appointments. We may end up witnessing all-too-familiar revolving-door appointments in the financial sector this time, too.

The previous government was notorious for rewarding high-paying financial seats to confidantes and acquaintances of President Lee. Senior government officials also moved to executive posts in financial industry-related associations and organizations upon retirement. The new government is already showing signs of inheriting the poor tradition. Scholars and bureaucrats who worked for President Park Geun-hye during the election are vying heavily for the chairman posts at KB and Woori Financial Group.

Inappropriate appointments can ruin financial companies and the industry. Local financial institutions are cited to be performing more poorly than during the years of President Roh Moo-hyun. The new government must appoint suitable and qualified figures in top executive posts of financial institutions through transparent and fair procedures. President Park must interfere to strictly divorce politics from the financial sector by announcing punishment upon signs of lobbying and campaigning.

Financiers are also to be blamed. Executives have worked for their own interests rather than being concerned for their company’s future. While emphasizing industrial competitiveness, they acted in the opposite way. Outside directors who should have served as watchdogs over management instead acted more or less as the executive members. The financial sector itself invited state involvement. The government and politicians should hear out opinions and be familiar with the problems in the industry to draw up policies and legislative bills.

What is imperative is restructuring in the ownership structure. The management rights and sovereignty of outside directors should be ensured so that they become free of government interference and serve entirely for the corporate good and industry’s sake. We cannot create global financial institutions if political-industry ties are not cut.