Top-Rated State Firms Corrupted, Poorly Managed

According to the prosecution, a former senior official of the Korea Highway Corporation’s Incheon branch was arrested on charges of taking bribes in return for leasing and selling state-owned land and a Grade 4 public official at the Busan District Prosecutors’ Office was also arrested on the same charges after receiving a free overseas trip and sexual favors in return for a construction contract.

It has been confirmed that many of the public corporations that were recently accused of lax management had received the highest or the second highest grade on a scale of six at the “innovation evaluation” carried out at the end of the Roh Moo-hyun administration.

Critics say that the Roh administration’s policy of improving public corporations’ efficiency through reforming rather than privatizing either had fundamental flaws or the innovation evaluation was carried out by rule of thumb.

According to the 2007 report on public corporations` innovation efforts, a total of 10 state-owned companies had received the highest grade of six in the total score.

According to the recent audit report released by the Board of Audit and Inspection (BAI), four out of the six top-rated state institutions -– Korea Expressway Corporation, Korea Electric Power Corporation, Korea District Heating Corporation and Korea Railroad Corporation –- were charged lax management, with some paying excessive amounts of retirement bonuses to their employees.

Prosecutors also arrested a senior official of the Korea Credit Guarantee Fund on charges of unlawfully issuing a letter of credit guarantee and arranging bank loans in return for 300 million won. Korea Electric Power Corporation, Korea Railroad Corporation and Korea Expressway Corporation all had received the top grade in the transparent and ethical management section.

Public corporations with the second highest grade were no different.

The prosecution arrested an employee of the Korea Workers` Compensation and Welfare Service on charges of squandering 1.5 billion won of the company’s money that he has siphoned over the past three years for gambling and stocks. In the case of Korea Resources Corporation, one of its employees was found to have received kickbacks in favor of making a false report on a facility inspection.

Moreover, two employees of the Korea Tourism Organization were also arrested on charges of taking bribes in the process of making a bid announcement and selecting the winner for an outsourcing project. All three of the public institutions had also received the top grade in the transparent and ethical management section.

“The evaluation of the actual performance was not properly carried out as the criteria for the innovation evaluation were mainly for the sake of formalities, such as the number of seminars held,” said Dr. Cho Seong-bong, a senior analyst of the Korea Economic Research Institute. “The most accurate evaluation of the public corporations can be made in the market through privatization or the initial public opening.”

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