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KBS, Illegally Distributed its Surplus Income to Employees

KBS, Illegally Distributed its Surplus Income to Employees

Posted September. 16, 2003 23:09,   


Some concern that public enterprises` achievements can be asymmetrically funneled into a small group of the company workers since some of government-sponsored firms including the Korean Broadcasting System or KBS offered special benefits of “the budgetary surplus”, as they call, to their employees in both direct and indirect ways.

Lee, Han-gyu, a senior member of the Finance and Economy Committee (FEC) at the National Assembly said, “KBS, the Korea Development Bank (KDB), and the Educational Broadcasting System(EBS) are government-sponsored enterprises, whose capital stock was completely provided by tax-payers. But these enterprises, unlike others, are not returning their surplus income to the government in forms of dividends or treasury deposits. His remarks came yesterday while presenting the“review on the Ministry of Finance and Economy (MOFE)`s plans on revenue and expenditure for the year 2002” to the FEC.

The report also blamed, “KBS has spent its reserve funds in distributing rewards to its employees for several years”.

It also added, “The government-invested broadcasting firm is spending over 100 billion won each year in severance payments while running its own retirement system, different from that of the Ministry of Planning and Budget so that the firm can hold on to the progressive benefits, based on the basic salary. ”

The report highlighted, “Given the principle of equity among other enterprises, either sponsored or invested by the government, institutional frameworks should be improved to guarantee that any surplus income from the three enterprises can be delivered to the national treasury.”

The substances of the report provoked ambivalent responses from the rebuked enterprises.

“Article 39 of the KBS Incorporation stipulated that a surplus income can be hold within the company according to decisions of the Directors` Board”, said Chung, Sung-jin, Assistant Manager of Budget and Planning Department at KBS. He also noted, “We wonder if it is right for KBS to deliver its profits to the government when KBS is not provided with financial support from the government while KBS is taking over national projects, such as to introduce digital broadcasting in the nation.”

KBS added in saying that the company recently abolished the progressive system of severance payment and that KBS was not alone in tapping the reserve funds to pay bonuses for the company workers.

On the other hand, Ahn, Dong-myung, head of the Department of General Planning at the KDB, announced, “The industrial bank law in its Clause 44 stipulates that total sum of profit money should be reserved within the organization, but the bank agreed with the MOFE to revise the law in August this year.” He added, “From now on, KDB will not fail to deliver its profit to the government through dividends.”

Yong-Ki Kim ykim@donga.com