Retired High-Ranking Officials Became Inspectors of Financial Companies

The Public Service Ethics Act (PSEA) prohibits high-ranking officials (above the second degree) of the Financial Supervisory Service (FSS) from getting a job in financial companies after retirement. However, it was revealed that many of them were employed as inspectors or presidents of these companies. For this, they used the PSEA loophole by moving to other departments that are not relevant to financial affairs right before retirement, such as the human resource development bureau, general affairs bureau, and customer protection centers.

Accordingly, FSS is facing public criticism for their “expedient” personnel management practice.

According to a report on the employment of FSS retired high-ranking officials presented by the FSS to Kim Jung-hoon, lawmaker of the Grand National Party belonging to the National Policy Committee, since 2001 when the FSS was founded, 141 high-ranking officials (above the second degree) have retired, and, of those, 83 got new jobs in financial companies.

Among these 83 retired officials, 51 changed their posts right before retirement to human resource development bureaus, general affairs bureaus, and customer protection centers, and 68 got employed right after retirement as inspectors in banks, insurance companies, and securities companies, which demonstrates that they made deals with these companies while they were carrying out duties in the FSS.

For example, Son Gwang-gi, who was appointed as a director of the first insurance inspection bureau in 2006 April, was arranged to join a human development bureau as an instructor in March of this year. After retiring from the office on May 30, Son was employed as an inspector for Samsung Fire and Marine Insurance. Meanwhile, the reemployment rate of FSS high-ranking officials has rapidly increased from 45.7 percent in 2005 to 60 percent in 2006, and 76 percent in August of this year.

Besides, of the 19 officials who got new jobs in financial companies this year, 16 found new jobs within three days after retirement, and 13 were assigned to join other departments such as the human resource development bureau right before their retirement.

The PSEA bans FSS high-ranking officials from being employed in private companies that are “relevant” to the affairs of the departments they worked at for the last three years of their service at FSS.

However, many FSS officials who took charge of the inspection of the banking sector were assigned to work in the general affairs bureau or human resource development bureau just ahead of retirement and found new jobs in non-banking sector after retirement. Others adopted different ways to be employed in “irrelevant” business sectors.

Regarding this, a source from the FSS said that, “They were employed under the approval of the Public Officials Ethics Committee, and we didn’t take any action to help their employment in financial companies.”

woogija@donga.com