Overhaul scandal-ridden public developer to near dissolution
The government unveiled a plan, Monday, to reform the Korea Land & Housing Corp. (LH), the state-run agency in charge of planning and building new towns and homes that has become the target of public outrage following a series of speculation scandals. The restructuring plan, which comes three months after LH employees caused public anger by making lucrative property deals using inside information, calls for trimming the workforce and preventing speculation. However, the key point of structural reform is missing, and the steps aimed at preventing speculation appear to be insufficient.
This is more than disappointing, considering the government promised to revamp the state-run developer "to the level of dismantlement." More specifically, the plan will reduce nearly 10,000 LH employees by 20 percent, force it to concentrate on ensuring housing welfare for the public, and abolish its non-core functions, or disperse them to other organizations. In addition, the Ministry of Land, Transport and Infrastructure will take over LH's authority to look for and select locations to build new towns.
To enhance internal monitoring, LH will also obligate all employees to register their assets and ban them from acquiring land for purposes other than actual use. However, the essence of the ongoing situation is not wanton behavior by a handful of LH employees. Internal control was almost non-existent at the behemoth state enterprise, created by merging a state land developer and a public housing corporation in 2009, despite this monopolizing power in a bloated organization that sharply raised the risk of irregularities.
The strengthening of internal control is a natural step that should have been done much sooner. However, it is not easy to eliminate irregularities with laws and regulations alone. To restore lost public trust, it is imperative to rectify structural problems, such as excessive authority and power.
The government and ruling party can hardly avoid blame for coming up with a half-baked reform plan even after repeated consultations. Anything less than the near dismantling of the LH will only deepen public suspicion that it is just a temporary and superficial solution to soothe people's anger. The government should drastically revise its reform plan, knowing that this is its last opportunity to restore public trust.
The government unveiled a plan, Monday, to reform the Korea Land & Housing Corp. (LH), the state-run agency in charge of planning and building new towns and homes that has become the target of public outrage following a series of speculation scandals. The restructuring plan, which comes three months after LH employees caused public anger by making lucrative property deals using inside information, calls for trimming the workforce and preventing speculation. However, the key point of structural reform is missing, and the steps aimed at preventing speculation appear to be insufficient.
This is more than disappointing, considering the government promised to revamp the state-run developer "to the level of dismantlement." More specifically, the plan will reduce nearly 10,000 LH employees by 20 percent, force it to concentrate on ensuring housing welfare for the public, and abolish its non-core functions, or disperse them to other organizations. In addition, the Ministry of Land, Transport and Infrastructure will take over LH's authority to look for and select locations to build new towns.
To enhance internal monitoring, LH will also obligate all employees to register their assets and ban them from acquiring land for purposes other than actual use. However, the essence of the ongoing situation is not wanton behavior by a handful of LH employees. Internal control was almost non-existent at the behemoth state enterprise, created by merging a state land developer and a public housing corporation in 2009, despite this monopolizing power in a bloated organization that sharply raised the risk of irregularities.
The strengthening of internal control is a natural step that should have been done much sooner. However, it is not easy to eliminate irregularities with laws and regulations alone. To restore lost public trust, it is imperative to rectify structural problems, such as excessive authority and power.
The government and ruling party can hardly avoid blame for coming up with a half-baked reform plan even after repeated consultations. Anything less than the near dismantling of the LH will only deepen public suspicion that it is just a temporary and superficial solution to soothe people's anger. The government should drastically revise its reform plan, knowing that this is its last opportunity to restore public trust.
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