Getting Paid During Suspension, Even C Grades Get Scholarships... Why Are Public Institutions Like This?

National Assembly Budget Office Reviews '2020 Fiscal Year Public Institution Settlement Data'

[Sejong=Asia Economy Reporter Kwon Haeyoung] It has been revealed that moral hazard in public institutions is hardly subsiding. Some employees who received severe disciplinary actions such as suspension were paid wages during their suspension period, and in some cases, 'scholarships' were provided to employees' children with poor university grades. It was also common to support employees with living stabilization fund loans at interest rates far below market rates. These are all cases violating regulations related to public institutions, highlighting the need for stronger management and supervision of public institutions.

According to the '2020 Fiscal Year Public Institution Settlement Data' released by the National Assembly Budget Office on the 15th, Korea Rural Community Corporation, Korea Maritime Transportation Safety Authority, Korea National Railway, and others paid salaries to employees who were suspended during their disciplinary period.

According to the National Public Service Act and other laws, payment of salary or monthly base pay during suspension is prohibited. Suspension is a disciplinary action imposed for serious violations of duty such as embezzlement or misappropriation of public funds, breach of trust in the course of duty, and sexual violence against minors, indicating a serious level of moral hazard in public institutions.

Korea Rural Community Corporation's internal regulations allow payment of 50% of the monthly annual salary during suspension, and from 2016 to 2020, it paid 965 million KRW in wages to 14 suspended employees. Korea Maritime Transportation Safety Authority paid 71 million KRW to 14 suspended employees during the same period, Korea National Railway paid 65 million KRW to 7 employees, and Korea Expressway Corporation paid 57 million KRW to 11 employees.

There were also many cases where living stabilization fund loans were provided to employees at excessively low interest rates.

The Health Insurance Review and Assessment Service provides interest-free living stabilization loans to employees assigned to non-native areas, supporting a total of 3.485 billion KRW to 52 people last year. Korea Power Exchange and Korea Midland Power applied an interest rate of 0.45%, and Korea Plant Service & Engineering applied 0.5%, lending 478 million KRW, 3.93 billion KRW, and 13.65 billion KRW respectively to employees. Korea Hydro & Nuclear Power supported 1180 employees with a total of 31.4 billion KRW at an interest rate of 1.15% last year. All these rates are much lower than the general credit loan rate of 3.5% as of December last year.

This violates guidelines related to public institution innovation. According to relevant regulations, public institutions can support living stabilization funds through in-house labor welfare funds, but the loan interest rate must be determined considering market interest rates. Interest-free loans are completely prohibited.

There were also many cases where employees circumvented regulations prohibiting university tuition support by providing 'scholarships' under the name of scholarships to employees' children with low grades. Korea Electric Power Corporation and Korea Nuclear Fuel provided scholarships up to 1.5 million KRW per semester to employees with university student children who had a semester grade of C or higher. Korea Plant Service & Engineering supported 65% of the loan amount for the semester if a C grade was received, and Korea Digital Network and Korea Power Exchange supported 60% and 30% (123 million KRW) respectively.