[Column] A never-ending party at public corporations

Koh Hyun-kohn
The author is the executive editor of the JoongAng Ilbo.

Aspirants for jobs at public enterprises must take Korean history, language and various IT skill aptitude tests to earn high scores. The aptitude tests require money for tuition, textbooks and test-taking as well as time and effort to reach desired levels. Even with such qualifications, beating competition against hundreds of others is as exacting as wringing water out of a stone. Most applicants are eliminated in the documental screening stage. Even if one passes the excruciating interview, he or she would soon learn their humble position. No matter how hard they work, hardly any can end up at the managerial level.

The top executive positions at public enterprises have been reserved for senior government officials. An easier way is through politics or powerful people. Few are knowledgeable or experienced in the field. To them, the position offers a refuge until they can play at the field of their wishes — politics. Since they are simply passing through the company — and care less about corporate performance — they need not make enemies with the employees. They bargain with the union so as not to ruin their credentials.

The 350 public corporations subject to the Public Enterprise Operation Act annually spend a whopping 761 trillion won ($599 billion), larger than this year’s fiscal budget of 638 trillion won. Their net profit fell 5 trillion won from 2016 to 2021 and liabilities stretched from 493 trillion won to 583 trillion won during the period. The poor management is billed to the taxpayers. The government doled out 109 trillion won from tax coffers to assist the public enterprises.

The government grades public corporations annually, but their CEOs need not worry. Only one — the head of the Korea Maritime Transportation Safety Authority — was advised to leave office for poor management last year. Heads from Korea Land & Housing Corp. and two others received warnings for their underperformance. The CEOs pocketed bonuses even when the companies are in the red, which would be unacceptable in private companies. Lee Samg-geol of Kangwon Land, Kim Kyung-wook of Incheon International Airport Corp. and Won Kyung-hwan of Korea Coal Corp. were comforted with the CEO position after they lost parliamentary elections in 2020. The three companies all reported deficits in 2021. This cannot be right.

All past governments have regarded public companies as trophies to hand out for helping win elections. The tradition was intact with both the liberal and conservative governments. Former president Moon Jae-in promised there wouldn’t be any rewarding appointments in public enterprises in his inauguration speech themed to deliver a “world of no privileges and foul play.”

But the so-called parachute appointments were the most in number during his 5-year term. Moon used his appointment authority to the last minute of his term, seating a policy planning member Chung Ki-hwan at the Korea Racing Authority, a deputy director of National Intelligence Service Yoon Hyeong-jung at Korea Airports Corp., and his secretary for civic and social affairs at the Korea Foundation of Nuclear Safety late last year.

During his campaign, President Yoon Suk-yeol also promised to end the parachute tradition. Choo Kyung-ho, deputy prime minister for the economy, declared, “The party at public companies has ended.” But breaking a long habit can be tough unless it is done at the early stage of governing term. The cartels of politicians, government and labor unions to share their gains are deeply rooted. “The exploitive politics do not stem from politics of being the right or left, but from the accumulation from economic development and lifestyle over the last half of a century,” said Prof. Kang Jun-man in his book “Power Changes Human Brain.” The new government is hardly any different. As soon as the seats became empty, they were filled with the people of the new administration, bringing chagrin to the faces of those who thought Yoon would have fewer to be indebted to since he has not been in political field for long.

Korea District Heating Corp. CEO Chung Yong-ki was a lawmaker and district head who has no experience in the energy field. He joined Yoon’s election camp as an advisor for state affairs. He lost a party primary for candidacy for Daejon mayor for the June 1 local elections last year, but he was not forgotten and packed the top seat at a state utility company. How will this appear to the young who survive on cup noodles to study for tests and preparing for interviews for jobs at public enterprises?

More CEOs of public corporations named by the previous president will come to their term expiry this year and next year. The top positions at the Korea Housing & Urban Guarantee Corp. and the Korea Securities Depository will be vacant this month. There are rumors about Yoon’s former campaign staff or government officials landing the seats.

The queue for public CEO seats is getting longer because of a number of aspirants in wait after the 2024 parliamentary elections. They have little care for the well-being of public enterprises as long as they get the CEO title and fat compensation. The public would be closely watching to see if President Yoon stays committed to his slogan of “fairness and common sense.” They will be examining if he turns out to be any different from his predecessor. “There is no future for the country if it is buried in vested rights,” said the president in his New Year’s address. Let’s see if he means it.