Korea Investment Corporation with an Average Annual Salary of 110 Million KRW Repeats Investment Mistakes in Uninvestable Bonds and Stocks

182 Trillion Won Sovereign Wealth Fund Operator...Invested Without Checking Guidelines
Prohibited Stock Trading During Work Hours
Kim Ju-young, Democratic Party Lawmaker: "The Sovereign Wealth Fund Managing Massive Foreign Assets Fails to Follow Basic Rules"

[Asia Economy Reporter Wondara] It has been revealed that Korea Investment Corporation (KIC), where the average employee salary exceeds 100 million KRW, has repeatedly made mistakes by purchasing bonds and stocks classified as non-investable without checking the investment guidelines. It was also confirmed that stock trading during working hours, which is prohibited by employee work guidelines, took place. Disciplinary actions were limited to submitting corrective action plans and warnings.

On the 16th, Kim Ju-young, a member of the National Assembly's Planning and Finance Committee from the Democratic Party of Korea, inspected KIC's asset management status over the past three years and found that the asset managers repeatedly purchased bonds and stocks classified as non-investable or past maturity without verifying the investment guidelines.

In 2018, KIC purchased negotiable certificates of deposit (CDs) that had exceeded maturity and bought Ukrainian bonds, collateralized loan obligations (CLOs), and Bermuda mortgage-backed securities (MBS) classified as non-investable by the corporation. In 2019, it also purchased bonds from Greece, Oman, and Ukraine, as well as Singapore stocks, all classified as non-investable. There was even one transaction involving a credit rating below the minimum investment grade.

This year, there was a case where dividends and fund settlements related to initial investments from the Ministry of Economy and Finance and the Bank of Korea were mistakenly swapped in the records. Another case of purchasing Cayman Islands stocks classified as non-investable occurred again. Kim Ju-young’s office stated, "KIC, which manages the national fund, is repeatedly making basic mistakes by not checking the investment guidelines that classify where investments should not be made." They added, "Disciplinary measures only resulted in documents pledging to 'check the guidelines carefully' or 'make the best efforts to comply with investment guidelines'." KIC’s stock loss rate in the first quarter was 20.45%. Converted into monetary terms, it lost 13.7 billion USD compared to the end of 2019, which, applying the exchange rate of 1,280 KRW at that time, amounts to 17.536 trillion KRW.

Meanwhile, according to Alio, the public institution management information disclosure system, the KIC president’s annual salary this year was 452.01 million KRW, ranking first among all public institutions for the third consecutive year. The average executive salary was 354.82 million KRW, and the average employee salary was 110.92 million KRW. KIC is a sovereign wealth fund management institution established to increase national wealth by managing foreign currency assets entrusted by the government, the Bank of Korea, and public funds. As of July this year, it manages 162.8 billion USD (182 trillion KRW).

Assemblyman Kim stated, “It is fundamental to understand and operate according to the announced changes and guidelines for investable countries,” and pointed out, “Special attention is needed to prevent repeated violations of such investment guidelines.” He continued, “Basic mistakes such as reversing the initial investment amounts of entrusted assets from the Ministry of Economy and Finance and the Bank of Korea or transferring cash to incorrect destinations must not occur.” He emphasized, “A sovereign wealth fund managing enormous foreign currency assets must not lose public trust by failing to adhere to even the basics.”

This content was produced with the assistance of AI translation services.