Assemblyman Song Jae-ho "Some Corporations and Financial Public Institutions Operate Wastefully While Receiving Contributions"
Proposed Amendment to the 'Financial Services Commission Establishment Act'
[Asia Economy Reporter Park Sun-mi] A bill is being promoted to grant the Financial Services Commission (FSC) a regular supervisory duty over nonprofit corporations, enabling the resolution of mismanagement issues in nonprofit corporations under the FSC that are operated with financial public enterprise contributions.
According to the National Assembly Legislative Information System on the 13th, Song Jae-ho, a member of the Political Affairs Committee from the Democratic Party of Korea, along with 10 other lawmakers, proposed a partial amendment to the "Act on the Establishment of the Financial Services Commission" (hereinafter referred to as the Financial Services Commission Act) the day before, which mandates the FSC to have regular supervisory duties over nonprofit corporations under the FSC that either perform delegated tasks or have budgets exceeding amounts specified by Presidential Decree.
As of February, a total of 159 nonprofit corporations are registered under the FSC. These corporations perform public functions related to finance, and among them, some large-scale or publicly commissioned organizations receive contributions for organizational operations from financial public enterprises such as the Korea Development Bank and Industrial Bank of Korea, ranging from tens of billions to hundreds of billions of Korean won annually.
However, there have been multiple instances of improper budget management and mismanagement in nonprofit corporations operated with these contributions. Issues such as excessive retirement allowances paid to retired executives and scheduling overseas training programs that do not align with their intended purpose while providing expenses and benefits have been pointed out during the Political Affairs Committee’s national audit.
Management and supervision of these organizations are currently unsystematic. As of the end of 2020, the FSC conducted audits on nonprofit corporations 16 times and employment status investigations 3 times over the past five years. Moreover, due to the absence of legal grounds or regulations, the audit cycles vary irregularly by corporation, and the audit target areas are inconsistent, effectively leaving supervision to discretion.
In response, Representative Song Jae-ho proposed an amendment to the Financial Services Commission Act to enable the FSC to inspect and supervise the budgets, business, and affairs of nonprofit corporations, thereby supplementing the legal basis for regular supervisory duties. Representative Song emphasized, “It is equivalent to wasting taxpayers’ money invisibly when nonprofit corporations supported by public enterprises and public institutions operate with such improper budget management. We will establish a framework for regular supervision by passing the amendment to the Financial Services Commission Act to ensure that the public’s tax money is executed transparently.”
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