BAI Urges the Selling of 15 Subsidiaries of State-run Firms

The Board of Audit and Inspection has asked the government to sell 15 subsidiaries of state-run corporations including Korea Real Estate Investment Trust, Korea Housing Management, Korea Asset Investment Trust, Ansan Urban Development Institute and Korea Enterprise Data to private firms.

It is also calling for the restructure of seven subsidiaries of state-run corporations and the closing of branch offices of Korea Broadcast Advertising Corporation and the Bond Management Center of Korea Housing Finance Corporation, as well as the liquidation of Incheon Airport Energy.

The Ministry of Strategy and Finance and the Board of Audit and Inspection devised the measures to restructure 22 subsidiaries of state-run corporations after inspecting how they had been run.

After inspecting 65 subsidiaries of 32 large-scale state-run corporations including state-owned financial firms for a month since mid March, the board concluded that 15 subsidiaries should be privatized by being sold to private firms, five should have their functions and organizations reduced, and two should either be acquired by parent firms or liquidated after closure.

The board has yet to offer any opinion on over 39 subsidiaries including 18 subsidiaries of Korea Development Bank and the Industrial Bank of Korea which are scheduled to be privatized and 21 subsidiaries of Korea Electric Power Corporation which require further investigation. Thus the board has urged the government to restructure 22 subsidiaries out of 26 where it has actually conducted audits and inspections.

The 15 firms that will be sold to companies in the private sector include Korea Asset Investment Trust, Korea Housing Management, Korea Real Estate Investment Trust, Korea Construction Management, HiPass Plus, Korea Enterprise Data, Korea Port Engineering Corporation, KL Net, Pusan Newport Company, SKCTA, Sun Kwang, Ansan Urban Development Institute, Korea CES, the Small Business Distribution Center, and SBC Register.

The board pointed out that the subsidiaries should be sold to private firms since they have been taken advantage of by state-owned corporations as a way to deal with overflowing employees.

Those whose functions and organizations will be reduced include Korea Gas Tech Corporation, the Bond Management Center of the Korea Housing Finance Corporation (four), branches of Korea Securities Depository (five), hospitals belonging to the Workers Accident Medical Corporation and branches of Korea Broadcast Advertising Corporation (eight).

The board has urged poorly-performing state-run subsidiaries to close uncompetitive business sectors, strengthen core functions, and reduce employees.

It also argued that the government should liquidate Kyungbuk Tourism Development Corporation, whose business activities have overlapped with those of its parent firm Korea Tourism Organization, and Incheon Airport Energy, which has a higher price tag than Korea Electric Power Corporation in providing electricity to facilities of Incheon International Airport.

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