FSS Needs Urgent SurgeryThe Financial Supervisory Commission head, Lee Keun-young, and his staff held a rally on Monday to pledge self-purification. They issued a statement apologizing to the public and made a resolution that the FSS would become a supervisory organ focusing on the market and its clients. They vowed that FSS employees would be barred from stock investment and would refuse any form of entertainment or gifts.
Such self-reflection and self-purification are all very well, but they are not enough.
The scandal of the Korea Digital Line head, Chung Hyun-joon, did not happen just because officials were of particularly bad character. Under the current situation, the FSS, with its absolute power, was bound to degenerate into a hotbed of corruption. The structure that gives rise to corruption must be revamped - and the key words are "check and balances."
The mechanism to check and balance the FSS should be put in place as soon as possible. The financial watchdog has enjoyed a monopoly on financial supervision, but has not been subject to any surveillance or controls except for regular audits from the Board of Audit and Inspection.
With no one controlling the FSS - even when it was linked to irregularities - the odds of exposure were slim. Officials naturally were tempted to make quick money. Realistic and systematic external supervision must be introduced urgently. At present, one person heads the Financial Supervisory Commission and the FSS. By dividing his roles, the FSC might be given the right to oversee the FSS. Or the FSS could be incorporated into the government structure. For example, the FSS could become the Financial Supervisory Administration.
At this juncture, a plan is needed to dilute FSS powers.
For instance, except for its legal duties - inspecting and supervising financial institutions -its responsibilities could be transferred to other offices. It is worth examining the possibility of handing over auxiliary duties - including liquidating ailing companies and the right to give permission or approval to financial institutions - to the Finance and Economy Ministry or the private sector. At the same time, internal inspection must be reinforced.
By strengthening the Inspection Office''s functions and personnel, a permanent inspection mechanism could be put in place. The government might do well introduce an inspection committee system for itself, as it has been urging large private companies to do. Furthermore, the anti-corruption system should be put into operation promptly. It should ban stock investment, ban retired FSS employees from working in the financial sector for a certain period of time, and expand the categories of people who must report their assets and subsequent changes.
Reforms must be worked out and introduced as quickly as possible for smooth, prompt restructuring of corporate and financial sectors. Director Lee has said the fundamental revamping of the organization will be delayed because restructuring is of utmost importance right now. This is not a good idea.
As long as the FSS has a reputation as the "standard-bearer of corruption," reforms cannot be introduced properly. We must act quickly to do what can be done immediately.
Most importantly, the FSS should not be responsible for its own overhaul. No organ can lance its own infected boil. The Blue House or the Prime Minister''s Office should operate on the FSS as a matter of priority. Future reform must go hand in hand with surgery on the FSS.
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