+ A

Industry ministry’s ‘mafia’ receive cushy jobs too

Certifications are still costly for industry
2014-04-03 10:03
Kim Hyun-tae, former CEO of the Korea Coal Corporation, stepped down from his office last August to take responsibility for lousy management, which was proven by a grade E, the lowest possible, given to the corporation in a public institution assessment.

Company insiders predicted Kim was unemployable due to his highly public disgrace. They were wrong. After four months, Kim was named full-time vice chairman of the Korea Petrochemical Industry Association.

It was his fourth sinecure since his 2008 retirement from Korea Post, an agency then run by the Ministry of Trade, Industry and Energy.

When you leave the Industry Ministry, life only gets cushier.

According to research given to the JoongAng Ilbo by Kim Han-pyo, a Saenuri Party lawmaker on the National Assembly’s Trade, Industry and Energy Committee, 69 senior government officials of a level higher than division senior director from the Industry Ministry recently landed executive-level positions at private associations and research institutes. More than half of them got their jobs after the Park Geun-hye administration began last year.

According to Kim, at the largest 100 private organizations related to the ministry’s work, 70 percent of executive-level jobs are held by ex-government officials. The pattern is familiar from other ministries and other semi-public organizations.

Executive positions at 10 major land-related associations, including the Korea Housing Association, were dominated by officials from the Ministry of Land, Infrastructure and Transport. Of those 10, six took office after the Park administration began.

So-called parachute appointments are particularly famous from the Ministry of Finance. So common is the phenomenon that a term has arisen. The lucky former civil servants are called “Mofia,” a portmanteau of MOF, standing for Ministry of Finance, and the word mafia.

The nickname is spreading. The parachuted alums of the ministry of industry are now called “Sanfia,” which combines the syllable san, a shortened version of the Korean term for industry, saneop, and mafia.

For the Land Ministry, the nickname is “Gukfia,” using guk, an abbreviation of guktobu, which means Land Ministry in Korean.

Significant numbers of Industry Ministry retirees succeeded in getting new jobs within six months of retirement, while avoiding violating the public servant’s code of ethics that restricts civil servants from being re-employed at private companies within the first two years of retirement. This was possible because private associations and research institutes are excluded from the code.

After retiring at age 60 - a lot older than retirements from private industry - they move into second careers as executives of state-run companies and private associations, receiving annual salaries over 100 million won ($94,527). Many bounce from job to job for five to ten years.

Division heads or higher usually start as CEO of public enterprises that were under their ministries, and continue on as chairman or full-time vice chairman at an industry association. Senior directors can expect to be named a director of headquarters or executive director, and then finish their careers as association’s vice chairman or research institute president.

Kim Gi-ho, full-time vice president of the Independent Power Producer Association, has headed a public corporation and a private industry association after his retirement from the Industry Ministry in 2005. His final position there was head of the electric power division.

Many officials get new jobs within six months of retirement. Kim Jong-ho, deputy chief director at the Electric Contractors’ Financial Cooperative, and Leem Seung-yoon, president of the Korea Apparel Testing and Research Institute, started at their current position one day after retiring from the government.

Industry associations, which are supposed to represent private companies, get a lot less private sector-oriented when they’re run by former government officials - who maintain close ties with their former ministries.

“Our association’s member companies have difficulty freely criticizing government policies and officials at our internal meetings,” said an employee of a private association, “because what they say could reach current government officials’ ears anytime.”

The “nuclear power plant mafia,” former officials of the Korea Hydro and Nuclear Power Corporations who were re-employed at parts suppliers and quality certification authorities, was exposed in a nuclear plant corruption scandal last year.

“The government should maintain healthy but arms-length relationships with private sector groups,” said Lee Sang-bin, a professor at Hanyang University’s Business School. “With parachute appointments, that’s not the case.”

“The government should come up with more transparent appointment measures to encourage fair competition between former government officials and private sector figures,” said lawmaker Kim Han-pyo.

Small and midsize manufacturers are particularly affected by “parachute appointments” from the Industry Ministry in the certification system.

Smaller manufacturers are highly reliant on government certification so they can be chosen as a government supplier, a significant marketing tool.

But certification can be costly. According to lawmaker Kim, most of the 19 certification authorities under the Industry Ministry’s control are currently headed by retired officials from the ministry. They have resisted changes to the certification system sought by the industry.

BY kim dong-ho, lee tae-kyung and choe sun-uk [jiyoon.kim@joongang.co.kr]