KEPCO Blasted for Corrupt Mgmt., Excessive Bonuses

The Korea Electric Power Corp., or KEPCO, is under fire for allegedly favoring retired employees in choosing contractors and giving hefty bonuses despite being in the red.

In the parliamentary audit of the corporation at its headquarters in Seoul’s Gangnam district yesterday, ruling Grand National Party Rep. Kim Ki-hyun, a member of the parliamentary committee on knowledge economy, said, “KEPCO signed 327 contracts with a company set up by a group of retired employees worth 187.2 billion won (159 million U.S. dollars) between 2006 and September this year.”

Kim called the practice “a classic case of charity begins at home.”

The contract amount grew every year from 31.1 billion won (26 million dollars) in 2006, 41.8 billion won (35 million dollars) in 2007, 48.3 billion won (41 million dollars) last year, and 66 billion won (56 million dollars) this year through the end of last month.

The number of contracts with the company was 271 worth 184.9 billion won (158 million dollars), which accounted for most of the contracts.

Private contracts those signed with the company accounted for 77.5 percent or 243 contracts worth 143.3 billion won (123 million dollars). The company last year earned 51.83 billion won (44 million dollars) in revenue, 91 percent or 47.3 billion dollars (40 million dollars) of which came from contracts signed with KEPCO.

Kim said, “Most of these contracts are for overhead line inspection tours that don’t need to be private contracts. KEPCO is in effect giving preferential treatment to the company.”

“It’s difficult for the public to understand why retired KEPCO employees should be treated differently. KEPCO should provide an objective and transparent bidding process where external parties can participate.”

The power giant was also criticized for handing out hefty bonuses to its employees despite its deficit. Ruling party lawmaker Kim Tae-hwan said, “After analyzing data on the corporation’s annual profits, losses and bonuses submitted by KEPCO, the cumulative deficit exceeded 200 million won (170,000 dollars) over 30 months since 2007, but incentives of 856.6 billion won (731 million dollars) were paid out to employees over the same period.”

“Against such a backdrop, the public will find it difficult to accept KEPCO’s request for a rise in electricity bills. The least it can do is to return part of the bonuses.”

Responding to the allegations, KEPCO President Kim Ssang-soo said, “KEPCO made painstaking downsizing efforts that resulted in savings of 1.4 trillion won (one billion dollars) this year alone. The corporation needs to consider boosting employee morale. If the government goes as far as picking on bonuses, it will do no good for our corporation’s operations.”

achim@donga.com