End the parachute appointmentsOur financial industry is afflicted with so-called “parachute appointments” by President Moon Jae-in. The government has nominated Hwang Hyun-sun, former administrator at the Blue House, as an executive member of the Korea Growth Investment Corp. (KGIC), operator of the 20-trillion-won ($17.3 billion) Korean New Deal fund. On Wednesday, the KGIC held a board meeting and passed a motion to appoint him as head of the second investment operation headquarters at the state-run fund. The corporation plans to submit the motion to a general meeting on Sept. 16 for final approval.
The news shook the financial industry. Its insiders showed a very cynical reaction to the government’s decision. Rep. Kim Gi-hyeon, floor leader of the opposition People Power Party (PPP), joined the chorus by threatening to get to the bottom of the suspicious appointment unless the government withdraws it. The KGIC has recently created its second headquarters of investment after splitting the existing headquarters. The second headquarters will operate a 20-trillion-won New Deal fund after creating a fund jointly with the government, state-run financial institutions and private banks.
The post for investment management at the fund, which is to operate until after the administration changes next May, carries great significance. It requires a high level of expertise at running funds at least for 20 years in the field. A novice like Hwang would not even pass the application review process if he were not from the Blue House.
If that’s not a parachute appointment, what is? As major shareholders of KGIC include state-run banking institutions such as the Korea Development Bank and the Industrial Bank of Korea, it’s not free from government pressure.
The public cannot understand why the government places such a newbie in that position. Hwang’s two-year stint as an auditor for a corporation specializing in corporate restructuring is totally irrelevant. Even when he was appointed as auditor at the time, he was criticized as a parachute appointment.
Moon must go back to the basics. In his victory speech four years ago, Moon vowed to root out parachute appointments once and for all. But more people have been appointed to executive posts at public corporations under him than under any other administration.
An analysis by the Financial Economy Institute shows that 31.6 percent of 437 executive members of 39 banking institutions have been from the government, Moon’s campaign team, and the ruling party since 2017. Moon must explain why he could not keep his promise. The withdrawal of Hwang’s appointment could be the first step toward him finally keeping that promise.