Sixty-six Percent of Local Public Companies CEOs are Ex-Public Officials

No former president has ever been able to complete his three-year term of office at Daejeon Expo Park, a local public corporation that was established in 1999. In 2003, the city of Daejeon brought in a former private business management expert, Mr. Lee, who had once held the seat of director at Lotte Hotel and Lotte.

President Lee had planned a business trip to visit science institutions in three cities including the Pacific Science Center in Seattle, U.S., but the day before his departure, the city of Daejeon suddenly put a halt to his trip. The reason was seemingly petty, saying that he should complete the work that the city had assigned him before leaving for the trip. Five months later, President Lee resigned on his own free will with eight months left of his term. He concluded that he could not work with the city interfering on every single little detail. Almost as if this had been anticipated, a former Daejeon high-ranking public official was appointed in Lee’s place.

Despite the government’s policies to bring in private experts through public recruits to strengthen the competitiveness of local public corporations, which are under the control of local autonomous government such as districts or cities, retired public officials still hold power in local public corporations.

On May 4, this newspaper analyzed the career records of 103 local public corporations and the chief executive officers (CEO) of public corporations, apart from eight seats that were unconfirmed due to vacancy. The results of the data of the 95 CEOs showed that 63.1 percent were former public officials. Former officials from government enterprises such as Korea Land Corporation or KOTRA made up six percent, former members of staff of a popularly elected local group or the local assembly also amounted to six percent, while former private institute officials such as management experts constituted only 18 percent.

It has been confirmed that while recently, local groups have been busy announcing plans to release incapable public officials in a personnel reform, they have also been sending out retired public officials to public enterprises.

Four public business presidents and seven out of eight of the second-highest ranking executive director seats were filled by ex-Daegu executive public officials. The president of Daegu Urban Development Corporation is the only individual who is formerly a member of a private company. This position is an exception because he was appointed as president through public recruitment only after the president at the time in 2005, former Daegu executive public official Lee, had to resign in the middle of his office to take moral responsibility for workers being given special benefits in apartment sales.

There are also a large number of ex-public officials in the institutes that are financed by local autonomous groups. Educational positions, such as the presidents of Geochang Provincial College and Namhae College are also under the charge of former Gyeongnam province high-ranking public officials. It has also been confirmed that it become a practice for popularly elected group leaders to reward the services of their campaign members or advisers by appointing them as president of public companies. Since the May 31 election of last year, the percentage of ex-politician public company CEOs has risen sharply from 2.2 to 10 percent.

For this reason, a crippled personnel reshuffling has followed. The director for the current Ulsan mayor’s election campaign has been Ulsan City Credit’s CEO since 2004, and was reappointed for the position last month. He was formerly a pharmacist and has absolutely no relation to financial business. In the case of Daejeon, the president of Daejeon Express Transit Corporation, a close aide of the previous mayor, had to resign without finishing his term due to pressure such as receiving city hall inspections after the current mayor came into office. However, the number of local public companies has been increasing every year since 1980, and recently, even basic local corporations are joining the race to establish public enterprises.

The Ministry of Government Affairs and Home Affairs (local public corporation head) Lee Jong-seong said, “The power to establish local public corporations and appoint CEOs has been transferred to local autonomous governments, so it is difficult for the central government to intervene.” He added, “We will provide measures to strengthen the evaluation of CEOs and eliminate unfit public companies.”

kimkihy@donga.com