Business
Big companies hire more ex-officials as directors
Published : Jul 22, 2011 - 19:26
Updated : Jul 22, 2011 - 19:26
Affiliates of South Korea’s top 30 conglomerates employed more former government officials as outside directors this year, data showed Friday, amid escalating criticism of the practice.

A total of 308 former government officials were working as outside directors at the 1,140 affiliates of the leading conglomerates as of end-June, up from 256 a year earlier, according to the data compiled by local research firm Chaebul.com.

The portion of ex-officials to the total rose to 38.5 percent from 32.9 percent, the data showed.

Upon retirement, a bulk of ranking government officials are scouted by companies, which wish to use their influence to build up favorable business ties. The deep-rooted practice has often been criticized for leading to an unjust business culture.

According to the data, nearly one-third of the government officials-turned-outside directors were former legal officials. A total of 97 ex-judges and prosecutors were employed as non-standing directors, compared with 84 last year.

Officials from government ministries came next at 49, followed by tax officials with 46. A total of 35 were recruited from regulatory bodies ― such as the Financial Supervisory Service, the Fair Trade Commission and the Board of Audit and Inspection of Korea.

As of end-June, 25 percent of the 30 conglomerates’ affiliates employed outside directors, whose main tasks are supervising corporate governance processes across a number of areas such as strategy, risk and performance.

There has been growing criticism that corporate outside directors in South Korea just serve as rubber stamps and are not worth their salt. 

(Yonhap News)
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