Stop the revolving door

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Stop the revolving door

An official with close ties to President Park Geun-hye is expected to take the position of chairman of the board at the Korea Exchange after the current chairman’s term expires soon.

Although as many as six candidates applied for the key post, market watchers believe that Chung Chan-woo, vice chairman of the Financial Services Commission, has already been nominated for the position. A former aide on President Park’s election campaign, Chung has even been called a “hotline to the Blue House” for his huge influence in appointments for heads of financial institutions when he served as the commission’s vice chairman.

If that is the case, it is disappointing. As the Korea Exchange is not a public corporation anymore, it does not have to abide by the current ethics law on public officials, which restricts rehiring of senior government officials. The shift in the Korea Exchange’s status offers fertile ground for revolving-door appointments.

Chung most likely took advantage of the change before giving up his rumored bids for CEO positions at the state-run Korea Development Bank and Industrial Bank of Korea. Market observers are concerned about the likelihood of the government raising bubbles in the stock market through revolving-door appointments.

The Korea Exchange is just the tip of the iceberg. Public bids for CEO positions at state-managed financial institutions have already begun for next year, including at the Korea Credit Guarantee Fund and Export-Import Bank of Korea. It is rumored that those who aspire to take the job are lobbying political bigwigs or the Blue House, triggering worries about the possibility of another round of large-scale revolving-door appointments before the president’s term expires in February 2018.

Revolving-door appointments are a chronic malaise in Korea’s financial sector, as clearly seen in the crises of Daewoo Shipbuilding and Marine Engineering and Hanjin Shipping. Even a massive government bailout could hardly help them stay afloat. Hanjin is currently under fire for causing the worst-ever global shipping crisis in our export-driven economy. That is an offshoot of the government’s knee-jerk revolving-door appointments.

Government-run financial institutions cannot sort out insolvent companies if they are controlled by puppets to the government. President Park vowed to root out the practice, but no one believes she has kept her promise.

JoongAng Ilbo, Sept. 19, Page 30
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