[Op-Ed] Backdoor Deals

Several years ago, comedians on a popular TV comedy show claimed they had to sign unfair deals with their management agencies. The agreements allegedly covered 10 to 15 years but entailed no payments to the comedians for signing. The comedians had to sign them or risk being fired from the show. The dark side of show business was made public. Backdoor deals involving entertainers are illegal and unfair contracts. The suicide of actress Jang Ja-yeon was also partially caused by such a deal.

Backdoor deals have also sprung up in inter-Korean cooperation projects, which must be based on humanitarian criteria. The Kim Dae-jung administration signed a secret contract on paying North Korea 500 million dollars for holding the historic inter-Korean summit in 2000, and delivered the payment. In a 2007 program for exchanging video messages between separated families in the Koreas, a backdoor deal also had the South pay 1,000 dollars per video message to the North. If the plan was fair and unbiased, then Seoul would have no reason to hide it. The presidential office of Cheong Wa Dae recently ruled out backdoor deals to facilitate a third inter-Korean summit to quell rumors.

Backdoor deals between labor and management at state-run companies are rarely made public since they usually benefit both sides. At many such companies, it has become customary for new top managers who were politically appointed by the ruling camp to sign backdoor deals on pay raises and incentives. This is to appease unionized workers who opposed the managers’ appointments.

Pay raises through such illegal measures directly hurt taxpayers. This year, 27.3 trillion won (23 billion U.S. dollars) will be funneled to state-run companies from the national budget. A considerable amount of this budget will be spent to cover labor costs at the companies. The government has repeatedly stressed reform of the public sector but has yet to catch and nullify a single backdoor deal.

The union of the state-run Korea Deposit Insurance Corp., a company nicknamed “God’s workplace” because of its high salaries and generous perks, is alleged to have demanded a backdoor deal to management. The union reportedly sought pay raises of more than 15 percent after the incumbent administration leaves office in return for a pay cut of five percent this year. If such companies and unions pretend to fully cooperate with the government’s efforts to cut pay in the public financial sector, they can pocket bonuses by winning better grades in government evaluation. Management rejected the union’s demand, but this act constitutes theft of taxpayers’ money by labor and management at a state-run company. The government must closely check for backdoor deals at other state-run financial institutions.

Editorial Writer Park Yeong-kyun (parkyk@donga.com)