Audit Board Could Ask Public Companies to Restructure

The Board of Audit and Inspection (BAI) is reportedly planning to induce public enterprises including the Korea Trade-Investment Promotion Agency (KOTRA), the Korea Land Corporation, the Korea National Housing Corporation and the Korea Asset Management Corporation to carry out a large-scale restructuring and a change of functions.

An official at the BAI confirmed the plan on November 4 saying “In particular, we are planning to encourage some public corporations whose reasons for being have been called into question after their establishment in the 1960s and 1970s to be liquidated.

After a series of complaints about careless management and moral hazards of public corporations were raised, the Board of Audit and Inspection began its extensive inspection of 47 financial and construction public entities last month. The Board is scheduled to complete the inspection by the end of this year and based on the outcomes, it will make recommendations such as restructuring to the companies in question.

The BAI official commented on the KOTRA, “KOTRA’s overseas offices in advanced nations will be reduced while its function will be changed to collect trade information of mid- and low- income nations. There would be a sweeping restructuring.”

The Board concluded that KOTRA’s information on trade does not keep up to date, at a time when the Internet provides the latest trade and investment information of major countries including the U.S., Japan and China.

Since some of the functions of the Korea Land Corporation and the Korea National Housing Corporation overlap, the Board of Audit and Inspection has recommended a consolidation of the two corporations. Previously, on November 3 in a press conference marking his second anniversary of inauguration as a chairman of the Board, Jeon Yun-cheol said, “Public corporations that have already accomplished their missions should go out of the picture.”

Chairman Jeon declined to pinpoint which corporations are on the liquidation list, saying, “It will only be possible to predict after we compare the requirements of the development era in the 1960s and 1970s with current requirements.”

Hyung-June Park lovesong@donga.com