[Yoon Seok-yeol Elected] Half of Financial Public Institution Executives Replaced... Will Parachute Appointment Controversy Disappear?

39 of 80 Executives at Financial Public Institutions Soon to Complete Terms
Parachute Appointments Surge in First Years of Lee Myung-bak, Park Geun-hye, and Moon Jae-in Administrations
Experts Say "Ability and Expertise Over Origin and Background"

President-elect Yoon Seok-yeol receives a bouquet at the People Power Party's vote counting situation room set up at the National Assembly Library in Yeouido, Seoul, on the 10th. Photo by Yoon Dong-ju doso7@

It has been identified that nearly half of the executives at financial public institutions will be replaced immediately after the presidential election. Yoon Seok-yeol, who was elected as the 20th president and is a member of the People Power Party, is highly likely to exercise personnel authority, drawing attention to whether the recurring controversy over 'parachute appointments' seen in every administration will disappear.

According to the public institution management information disclosure system Alio on the 10th, half of the executives at seven financial public institutions (Korea Credit Guarantee Fund, Korea Deposit Insurance Corporation, IBK Industrial Bank of Korea, Korea Development Bank, Korea Asset Management Corporation (KAMCO), Korea Housing Finance Corporation, and the Korea Inclusive Finance Agency) have either already ended their terms or are about to expire. Among 80 executives including full-time heads, auditors, directors, and non-standing directors, 39, accounting for 48.7%, are scheduled to be replaced.

The institution with the most executive replacements is KAMCO. According to the latest executive status data disclosed by KAMCO in January, 11 out of 16 executives (68.7%) need to be newly appointed. In particular, among the non-standing directors who oversee the institution and its head, all except non-standing director Lee Dong-yeol are about to be replaced. The terms of non-standing directors Ahn Tae-hwan and Lim Chun-gil end on April 22. Standing director Hong Young's term already expired on November 14 last year.

At the Korea Credit Guarantee Fund, the head's term is about to expire. Yoon Dae-hee, chairman of the Korea Credit Guarantee Fund, who was appointed in June 2018, will end his term on June 4. Additionally, non-standing directors Han Seung-hee and Seo Jong-sik ended their terms on January 30, non-standing director Kim Sang-jun's term ends in August, and non-standing directors Hong Dong-ho and Shin Soon-cheol's terms end in December. Other institutions are also expected to replace between at least two and up to six executives.

The key issue is whether parachute appointments, a chronic problem, will recur. Past presidents have criticized previous administrations during their candidacies and pledged to eradicate parachute appointments. However, once in office, they distributed positions to close associates. Former President Lee Myung-bak filled 58 out of 102 public institution heads in his first year with people from the 'Goso-young' group (Korea University, Somang Church, Yeongnam region). Former President Park Geun-hye, who pointed out this as a "wrong practice," replaced 78 out of 125 institution heads in her first year with people from the 'Seosoo-nam' group (Seoul National University, professors, Yeongnam region).

Recurring 'Parachute Troops' in Every Administration... "Ability and Expertise Are Key"

President Moon Jae-in also strongly criticized the parachute appointment practices of the Lee Myung-bak and Park Geun-hye administrations by attending major labor union rallies as the 19th presidential candidate. He signed a policy agreement with the National Financial Industry Labor Union pledging to eradicate parachute appointments. However, President Moon also saw a surge of parachute appointments known as 'KAMCOder' (Camp, Code, Democratic Party). According to People Power Party lawmaker Kang Min-kuk, 63 pro-government and pro-ruling party affiliates were appointed to financial public institutions over five years.

This year's personnel decisions are expected to be made by Yoon Seok-yeol, the president-elect. Yoon has not clearly stated his position on parachute appointments in financial public institutions. However, when asked about personnel at the public broadcaster KBS, he responded, "Assigning someone who worked in the camp? I will not do that." During the campaign, a job posting guaranteeing exclusive Blue House employment for election camp members sparked parachute appointment controversy, but he clarified it was unrelated to the camp.

The amended 'Act on the Management of Public Institutions (Public Institution Management Act),' which passed the National Assembly plenary session in January, is also expected to have an impact. According to the amendment, the boards of public institutions such as public enterprises or quasi-governmental agencies must appoint one non-standing director recommended or consented to by worker representatives.

Nevertheless, many predict that parachute appointments are realistically unavoidable. Professor Lee Jung-hee of Chung-Ang University's Department of Economics said, "Many people helped get elected, so excluding parachute appointments is difficult in real politics, and the key is to what extent they are allowed," adding, "At least for important positions such as institution heads or auditors, appointments should prioritize ability over origin or background."

Professor Kim Dae-jong of Sejong University's Department of Business Administration analyzed, "The president-elect must select people who align with his vision to implement his national policy philosophy, so political and camp affiliates are inevitable," and added, "Parachute appointments without ability and expertise should be considered problematic." He further stated, "Ultimately, if there is expertise, there will not be much controversy."