Great power, great responsibility
Published: 23 Jan. 2019, 20:43
The Ministry of Health and Welfare has come up with guidelines for the NPS to exercise its rights as a major shareholder to proactively curb controlling families’ profiteering, embezzlement and breaches of trust. The ministry based its decision on the need to protect ordinary investors and ensure long-term profits for the NPS so it can return more benefits to its subscribers in their retirement.
However, under the current circumstances — in which the fund cannot enjoy political independence — this may constrict companies’ managerial rights and possibly trigger controversy over the NPS becoming a kind of socialist fund. It will not be easy for the fund to resist influence from the government or the ruling party in a structure where the minister of health and welfare serves as chairperson of the fund’s management committee, the highest decision-making body of the NPS. That’s not all. Whenever an administration changes, the government replaces the chairperson of the board of the fund, who has the right to recommend the chairman of the fund management committee.
The NPS’ exercise of its rights as a major shareholder is a sensitive issue. In some cases, it could flex its muscles on the future of large companies’ ownership. In yesterday’s meeting, there was a keen divide over whether the NPS should exercise its rights as a major shareholder in Hanjin Group, including Korean Air and Hanjin Kal. The episode shows it needs to take a prudent approach.
The biggest responsibility of the NPS is handling the money entrusted by the public and investing it wisely. No one opposes the fund taking a bigger social role. It must first uphold the value of long-term profits. The NPS must not interpret Moon’s remarks as carte blanche to exercise its rights — and threaten managements of companies.
JoongAng Ilbo, Jan. 24, Page 30
with the Korea JoongAng Daily
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