If a Scandal Like 'LH Land Speculation' Occurs, Performance Bonuses of All Employees in Public Institutions Will Be Cut

Government Considers Imposing Management and Supervisory Responsibility on Entire Institution for Individual Employee Misconduct in Case of Serious Misconduct Occurrence

On the 18th, members of the Seongnam Residents' Solidarity held a press conference in front of the Blue House Fountain in Jongno-gu, Seoul, urging the eradication and expansion of the three major illegal acts by LH (land speculation, withholding of housing relocation expenses, and construction corruption) to eliminate vested interests and violations of housing rights. / Photo by Moon Honam munonam@

[Sejong=Asia Economy Reporter Kwon Haeyoung] In the future, if a 'major incident' such as real estate speculation by employees of Korea Land and Housing Corporation (LH) occurs in public institutions, all executives and employees of the respective public institution will be denied performance bonuses. When a serious misconduct that provokes public outrage occurs, the entire institution will bear management and supervisory responsibility for the individual's wrongdoing.

According to the government on the 21st, this content is being reviewed as one of the measures to prevent the recurrence of the LH incident by improving the public institution management evaluation system.

A government official said, "In the case of the LH incident, it is basically an individual's misconduct, but we believe it is right to hold the institution responsible for serious misconduct that was not properly managed, and we are seeking ways to improve the public institution management evaluation system in this direction."

In cases of serious misconduct like the LH incident, not only will the individual be held accountable, but the public institution will also face significant disadvantages by changing the public institution management evaluation system.

If a public institution fails the management evaluation, the worst-case sanction is dismissal of the head of the institution. Executives and employees will not receive performance bonuses. Since performance bonuses account for more than 10% of total compensation in some institutions, a cut in performance bonuses would cause considerable financial damage to employees.

The government is primarily considering increasing the scoring for ethical management and public interest in the public institution management evaluation. In particular, the ethical management section, which is directly related to the LH incident, currently accounts for only 3 points out of 100, which does not significantly affect the evaluation results. This is to address the problem. Although LH received a failing grade of D in ethical management during last year's public institution management evaluation, it received the highest overall grade of A because the bonus points for ethical management were too low.

Items related to social value implementation, such as 'Equal Opportunity and Social Integration (2 points),' may also be subject to increased scoring. In addition, measures are being discussed to deduct evaluation points from more indicators when serious misconduct occurs. For example, if an incident like the LH scandal occurs, not only the ethical management score but also the leadership score could be reduced by holding the institution responsible for poor management and supervision of employees.

In the case of LH, which caused controversy due to real estate speculation in the new town project, the possibility of failing last year's management evaluation, currently underway, has increased. The performance bonuses paid according to the 2019 management evaluation conducted last year are also at risk of being reclaimed. The government's position is that if LH employees' real estate speculation is confirmed, the completed management evaluation will be reflected to downgrade the existing evaluation grade and reclaim performance bonuses. LH employees received performance bonuses of 7.08 million KRW in 2017, 8.94 million KRW in 2018, and 9.92 million KRW in 2019.

The government plans to finalize the improvement measures for the public institution management evaluation system as early as this week or by next week at the latest.

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