Where regulations exist, there follows power. Behind the power, there comes corruption or interests. One of such interests is retired public officials’ “unretirement” by finding positions at private companies subject to supervision or affiliated organizations or relevant associations.
Two former governors of the Financial Supervisory Service (FSS) will be appointed as an auditor of KEB Hana Bank and Woori Bank, respectively, at each bank’s shareholder meeting to be held in March this year. Since the two banks received a reprimand warning from the FSS regarding the issue involving derivative-linked fund (DLF) linked to overseas interest rates, they have been arguing that such a measure is not acceptable. The appointment of former executives of the supervisory agency as auditors of the auditees is quite inappropriate in a time like this.
As KB Kookmin Bank, Shinhan Bank, KEB Hana Bank, and Nonghyup Bank have hired former officials of the FSS as their auditors, the auditors of all five major commercial banks will be taken by former executives of the FSS with another of such background being hired by Woori Bank. From the perspective of audit agencies and auditees, it creates a symbiotic “win-win” environment. Even though there is no legal issue as a three-year period of prohibiting reemployment after retirement has passed, the public cannot help but be concerned about the thoroughness of audit agencies’ supervision.
What’s especially problematic is when private sector companies or associations that are struggling with certain regulations are obliged to hire former public officials of the ministries that have introduced the regulations as a way of lobbying. This is not an unusual situation in public offices where “regulation authorities” exist. It is not an exaggeration when people say regulations are created to make soon-to-be-retired public officials’ unretirement.
There also is an inevitable correlation between the number of public officials and the number of regulations – the grounds on which public officials can base their authorities. During the last five years and a half since 2014, the number of public officials at so-called regulatory ministries, such as the Ministry of Environment and the Ministry of Employment and Labor, has seen a significant increase. During the same period, the number of regulations newly introduced or strengthened has also increased with 895 by the Ministry of Environment, 395 by the Ministry of Employment and Labor, and 470 by the Financial Services Commission.
The worst regulation among those newly added is the one created as a means to find high-ranking positions for retired public officials. The government has been advocating regulation reform with a variety of slogans, such as “regulation sandbox” and “negative regulation.” However, there is no more clear regulation reform than reducing the number of public officials.