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State Agency Financial Mismanagement?

Posted September. 19, 2006 06:54,   


The Government Employees Pension Corporation (GEPCO) runs its fund for larger profit-making by investing in various assets such as securities. Its business size, however, shrunk to 4.0432 trillion won in 2005 from 4.1772 trillion won in 2004, and was estimated to fall to 3.879 trillion won in 2006.

In contrast, its welfare business sector, such as resort businesses for public employees, savored the taste of achievement, spending 1.3748 trillion won last year, up from 1.1325 trillion won in 2004. Its expenditure for the welfare business will be increased to 1.5569 trillion won this year. To be sure, the GEPCO appears to make a display of its business with taxpayers’ money.

It is reported that a handful of government-run corporations have served their own interests and neglected their duties.

The Committee of Government Affiliates’ Operation made a report on such reckless management of the 87 state-run services to the National Assembly, said the Ministry of Planning and Budget on September 18.

However, many state-run services have been revealed to suffer from losses.

For instance, the Korea Veterans Welfare and Healthcare Corporation set its goal to raise a colossal fund worth 172.1 billion won from 2005 to 2009. It, however, suffered a net loss of 10 billion won last year alone. Thus far, it has recklessly issued unrealistic rosy future plans.

The Government Employees Pension Corporation (GEPCO) can be classified as a typical red tape operation in that it compensates its chronic deficits on pension fund with government subsidies.

Budget issues-

Some government-run corporations have problems with their operational process. For instance, the Korea Deposit Insurance Corporation (KDIC) convened its deposit insurance board, KDIC’s top decision-making body, as many as 22 times last year. Yet, seven meetings out of 22, 32 percent, failed to meet the required quorum and took a makeshift documentary resolution instead.

The Korea Asset Management Corporation (KAMC) carried 20.2 percent of the managerial board motions by holding makeshift documentary meetings, whereas the National Pension Service replaced five of formal executive meetings with written approvals out of thirteen board meetings last year.

Moreover, several government-run corporations have subsidized their affiliated organizations without precise legal ground.

The Korea Culture and Art Committee failed to provide evidence in regards to subsidies granted last year to the Federation of Artistic and Cultural organizations of Korea (Yechong) and the Korean People Artist Federation (Minyechong). The committee also came short of legal evidence concerning other grand-in-aid measures allocated last year 0.5 billion won to the Korean Actors Association and 30 million won to the Music Association of Korea, respectively.