New Board Members, Executive Director and Auditor Appointed... Concerns Over 'Nakhasan' at the End of Moon Administration (Comprehensive)

Executive Director is a Financial Services Commission Manager-Level Appointment, Auditor from the Private Sector
Union 'Strongly Opposes'... "Secretive Personnel Decisions and Expertise Issues" Opposition

[Asia Economy Reporter Kim Jin-ho] The Korea Credit Guarantee Fund (KODIT), a policy financial institution, is embroiled in controversy over the ‘nomination rumors’ for its standing director and auditor positions. It has been reported that a mid-level official from the Financial Services Commission and a former bank executive with no policy finance experience have been nominated for the standing director and auditor posts, respectively. Inside KODIT, voices are rising that ‘parachute appointments’ have gone too far during the final phase of the Moon Jae-in administration, and it is expected that controversy will arise during the upcoming appointment process.

According to the financial sector on the 2nd, KODIT plans to finalize the successors to Standing Director Park Chang-gyu and Auditor Shin Dae-sik as early as this month. The terms of Park and Shin expired on October 13 and October 14, respectively.

While the appointment process has been somewhat delayed, nomination rumors are circulating inside and outside KODIT. A source familiar with internal affairs said, "I understand that a mid-level official from the Financial Services Commission and a former CEO of a Woori Financial Group affiliate have been nominated as successors to Park and Shin."

The KODIT labor union is vocally opposing the nomination rumors with a slogan of ‘Firm opposition to parachute appointments.’ The union is protesting that the standing director position is being divided between the Ministry of Economy and Finance and the Financial Services Commission. Traditionally, the standing director’s basic term is two years, with one renewal (one year), typically serving up to three years. The fact that the current Standing Director Park, who is from the Ministry of Economy and Finance, is leaving immediately after completing two years is unprecedented and raises suspicion.

A union official criticized, "Ignoring tradition and unilaterally swapping positions is a typical closed-door personnel move among central government officials. Holding an executive candidate recommendation committee internally to justify the nomination of the standing director is merely for show."

The official also pointed out, “The nominated auditor has only been in the private sector, so there may be a lack of understanding of policy finance.” The auditor position at KODIT is filled by an internal candidate recommendation committee selecting candidates, the Ministry of Economy and Finance recommending candidates, and the president deciding on the appointment.

Meanwhile, concerns about ‘parachute appointments,’ which have been a chronic issue toward the end of administrations, are growing in the financial sector. In September, controversy arose when a former Blue House administrative officer with no financial experience was appointed head of Korea Growth Finance Corporation. Recently, parachute appointment controversies have also emerged at the Korea Securities Depository and the Korea Housing Finance Corporation.

In particular, Asia Economy recently reviewed the executive status of eight financial public institutions (the Korea Inclusive Finance Agency, Korea Credit Guarantee Fund, Korea Deposit Insurance Corporation, IBK Industrial Bank of Korea, KDB Industrial Bank, Korea Securities Depository, Korea Asset Management Corporation, and Korea Housing Finance Corporation) through the Public Institution Management Information System (ALIO) and found that 4 out of 10 executives were not free from parachute appointment controversies.

A financial sector official remarked, "Regarding the parachute issue, many expected the Moon Jae-in administration to be different from previous governments because it emphasized fairness, but looking back over the past four years, there was not much difference."