“Public Institution Treasury Management Becomes Transparent”… Anti-Corruption and Civil Rights Commission Recommends System Improvement

Establishing Safe Selection Criteria, Minimizing Cooperative Project Expenses

Public institutions are expected to establish criteria for selecting treasury banks and transparently disclose cooperative project funds received through treasury bank designation.

Kim Tae-gyu, Vice Chairman of the Anti-Corruption and Civil Rights Commission. [Photo by Yonhap News]

On the 18th, the Anti-Corruption and Civil Rights Commission (ACRC) announced that it had prepared measures to enhance the transparency of public institution treasury bank management and recommended them to the Ministry of Economy and Finance, the Ministry of the Interior and Safety, the Ministry of Education, the Financial Services Commission, and the Financial Supervisory Service.

According to the ACRC’s survey, public enterprises and local public enterprises, unlike education offices and local governments, had entered into long-term exclusive contracts for up to seven years without grounds or selection criteria for designating their treasury banks. Some public enterprises and local public enterprises designated the same treasury bank as the local government where the institution is located without legal or internal regulatory grounds, or received benefits such as preferential interest rates for executives and employees, condominium usage rights, and scholarships under the name of cooperative project funds.

The cooperative project funds received as compensation for treasury bank designation by 41 local governments and 18 national and public universities that submitted data to the ACRC amounted to approximately 900 billion KRW over about four years. If competition among banks to pay cooperative project funds overheats, it may lead to increased costs, resulting in higher loan interest rates and usage fees, which could be passed on as burdens to general customers.

Competition for university treasury banks is even fiercer because freshmen can be lifelong customers, and the scoring criteria for cooperative project funds in selecting treasury banks for national and public universities were twice as high as those for local governments, having a greater impact on treasury bank selection. Although public institutions are obligated to transparently disclose details of cooperative project funds received from treasury banks, it has been found that disclosure is not made continuously due to confidentiality clauses in agreements with banks.

Kim Tae-gyu, Vice Chairman of the ACRC, said, “Through this institutional improvement recommendation, we hope that various benefits gained by depositing the public’s precious taxes in treasury banks will be operated transparently and return to the public interest.”