Of parachute appointments
The author is a business news editor of the JoongAng Ilbo.
The appointment of Kim Nam-soo as the first head of KS Dream — a subsidiary of Korea Securities Depository (KSD) — in 2018 raised eyebrows and controversy. He had headed the union at Yakult Korea and served as a secretary to former President Roh Moo-hyun. Roh even officiated his wedding. Kim was sacked for playing golf with an executive of a large company a few days after the liberal Roh administration announced a ban in 2006 on government employees playing golf. He was soon seated as an auditor to another state-run entity, Korea Electrical Safety, but he was pushed out of the office after nine months for his bad work ethic during work hours.
Even without extra career building, Kim was recruited as the founding CEO with an annual compensation package of 180 million won ($158,675) as of last year. KS Dream was created as a KSD affiliate to permanently hire maintenance, cleaning and other contract workers for KSD in line with the government’s policy to abolish irregular employment in the public sector. KS Dream’s annual staff salary averages just 36 million won. When Kim’s appointment stirred controversy, KSD pledged to improve the appointment system. But Kim finished his two-year term and also gained an extension in July. The opposition People Power Party (PPP) Rep. Yoo Eui-dong claimed Kim used a luxury corporate car and credit card, but refused to submit details on the uses despite demand for parliamentary questioning.
There are ample cases like Kim’s. Of 2,727 executive posts at 337 public corporations and organizations affiliated with government ministries, 466 posts, or 17.1 percent, came from President Moon Jae-in’s election camp or the ruling Democratic Party (DP). Of them, 108 became CEOs, winning one out of three CEO posts at public corporations. Because of the slack appointment process, one person was named board member of three different public institutions. One was appointed even though he did not apply for the post.
The so-called parachute landing of political figures to public CEO posts can cause serious harms to the nation and economy. First of all, it can generate massive losses. Political CEOs like to enhance welfare benefits for union employees. Even with debt widening to billions of dollars, public institutions indulge executives with big bonus checks and employees with permanent packages. The deficits will translate into higher social and other taxes.
Second, public service standard can worsen. Public enterprises are required to supply better services at a cheaper cost. But political CEOs and executives lack expertise. They must meet the political needs or even help election campaigns when they are summoned. Responsible management is rare.
Third, confidence in the nation can be hurt. If parachute appointments become commonplace, society will come to believe it is better to win favor from the political sector instead of building up a career through experience and skills. As a result, the rule of equal chances and fair competition will be shaken. Employees will be discouraged to work hard for executive posts. Moral hazard and complacency will seep through public organizations.
During his campaign, Moon had promised to end the tradition of parachute appointments. The past governments at least feigned paying heed to the criticism. But this government knows no shame.