New Law Prohibits Public Officials from Owning Stock in Excess of 30 Million Won

In the future, the president and the prime minister will not be permitted to hold stocks with a total value exceeding 30 million won, regardless of the category of the issue.

Also, public officials of grade one or higher, including national assemblymen, ministers, and vice ministers, as well as public officials of grade four or higher in the Ministry of Finance and Economy’s Financial Policy Bureau and the Financial Supervisory Service must entrust to investment trust companies, asset management companies, or other financial institutions any stock holdings with a market value in excess of 30 million won that are deemed relevant to their official duties.

On July 29, the Ministry of Government Administration and Home Affairs (MOGAHA) announced the legislation of an amendment to the Enforcement Decree of the Public Service Ethics Act including the above changes. The amended Public Service Ethics Act will go into effect on November 18.

According to the revised bill, if a candidate for the blind trust of stocks is engaged in a post that involves drafting or implementing policies, enacting or amending enforcement decrees, issuing permits, approvals, licenses, and patents, or conducting investigations, examinations, and inspections related to the stock holdings, he or she must entrust said holdings to a financial institution.

In the cases of the president and the prime minister, whose official duties span the entire administration of state, the ownership of stocks is prohibited categorically. President Roh Moo-hyun currently owns no stock, while Prime Minister Lee Hae-chan only owns 10 million won worth of unlisted stocks, including those acquired through the Hyundai Asan Stock Purchase Campaign.

Whether or not the stock holdings of other candidates, including national assemblymen and the ministerial staff, are relevant to their official responsibilities will be determined by a nine-member “Inspection Committee on the Blind Trust of Stocks.”

The standard of assessment for stock value is market value for listed issues and face value for unlisted issues.

If an official whose stocks fall within the guidelines of the blind trust system refuses to entrust his or her holdings or is found to have operated such holdings after entrusting them, he or she will be subject to a fine of 10 million won or less, or a prison sentence of one year or less.

Meanwhile, the MOGAHA has made it mandatory for retired public officials to pass a screening by the Public Official Ethics Committee before they can find employment at a private company. Previously, the responsibility for determining the appropriateness of such employment had rested with the head of the retired official’s former agency.

Jong-Dae Ha orionha@donga.com