Ex-Bureaucrats Rule Boards of Securities Firms
By Cho Jin-seo
Staff Reporter
One in four outside directors at local securities firms are former government officials, data compiled from 24 firms showed Thursday.
Among a total of 91 outside directors, 28 were former ministers or other high-ranking officials in various government ministries and agencies before they were hired by the finance industry.
Such a high ratio of ex-government workers in trading firms' boardrooms raises suspicions that firms are recruiting from the public sector in order to exploit their lobbying power. The kinship between private firms and public sector employees also raises the risk of making regulators and policy makers complaisant with firms they monitor, in compensation of future job offers.
Three of six outside directors at Hana Daetoo Securities were former bureaucrats, according to the data collected by MoneyToday, an economic newspaper, from the public disclosure of the companies. Kim Byung-il was the Minister of Planning and Budget, Kim Young-chang worked for the National Intelligence Service and Hyun Jung-taek was a senior secretary for the economy at the presidential office between 2002 and 2003.
Though she is not counted in the trio of bureaucrat-turned-directors at Hana Daetoo, Lee Kye-kyong was a congresswoman for the governing Grand National Party until 2008, and worked for the election camp of President Lee Myung-bak. Before coming to Hana last year, the director Lee had had little connection with the financial industry, having spent most of her career in social welfare policies and party politics.
Kyobo Securities, Hanwha Securities and Mirae Asset Securities filled two of their four outsider directors' seats with former bureaucrats. Notably at Hanwha, Kim Jong-min was the Minister of Culture and Tourism and CEO of the Korea Tourism Organization.
Byun Jae-jin, former Minister of Health and Welfare, is now an independent director of Kiwoom Securities, together with Lee Yeong-ho, who was director of Financial Supervisory Service.
A strange case was found at Meritz Securities, where its sole outside director, Chang Kyung-cheon, was also the advisor at Stockpia, an online trading system company. Meritz awarded a consulting contract to Stockpia last year.