Despite Employment Difficulties, Parachuting Continues... 7 out of 10 Financial Supervisory Service Retirees Reemployed in the 'Financial Sector'

Last Year with Severe Employment Crisis Saw a 138.5% Increase Compared to the Previous Year
83% of Retiree Employment Reviews Found 'No Job Relation · Employment Possible'

[Asia Economy Reporters Kwangho Lee and Kiho Sung] It has been revealed that 7 out of 10 retirees from the Financial Supervisory Service (FSS) over the past five years have been re-employed in the financial sector. In particular, since the inauguration of the Moon Jae-in administration, the re-employment rate of the "Geumpia" (Financial Supervisory Service + Mafia) has increased annually, with last year seeing nearly a threefold rise. Experts point out that considering the recent job market, the increase in their employment rate could spark fairness controversies. Consequently, calls are emerging for a system overhaul regarding the re-employment of FSS retirees.

◆ 7 out of 10 Retired Executives Re-employed in Financial Sector = According to the '2016-2020 Re-employment Status of Retirees' received by Yoon Chang-hyun, a member of the National Assembly's Political Affairs Committee from the People Power Party, from the FSS on the 31st, a total of 79 employees at grade 4 or higher were re-employed after retirement through the Public Officials Ethics Committee's review over the past five years. Among them, 54 retirees moved to the financial sector. This means that 7 out of 10 were re-employed by financial companies.

Among those reviewed by the Public Officials Ethics Committee, the largest number re-employed were at securities companies with 15 people. This was followed by savings banks with 12, insurance with 5, banks with 2, card companies with 2, capital companies with 2, and loan businesses with 2. Fourteen executives moved to financial-related organizations such as associations and research institutes, while the remaining 25 moved to large corporations.

The number of re-employed retirees surged noticeably last year. Thirty-one people were re-employed, an increase of 138.5% compared to the previous year. The number of FSS re-employments dropped from 22 in 2016 to 4 in 2017, then rose to 10 in 2018, 13 in 2019, and 31 last year.

Under the current Public Officials Ethics Act, FSS employees at grade 4 or higher are, in principle, prohibited from re-employment in financial companies for three years from their retirement date. This is to prevent unfair collusion that grants special favors to specific companies for re-employment purposes and to block the possibility of exerting undue influence on the FSS after being employed in the financial sector.

However, analysis of FSS data shows that among 54 retirees (excluding 25 who moved to large corporations) who underwent employment review by the Public Officials Ethics Committee during this period, 45 were judged as 'eligible for employment' due to no work-related connection. Nine were approved for employment despite work-related connections because the possibility of influence was deemed low.

The high rate of 'eligible' and 'approved' decisions is largely due to the decisive role of the opinion letter from the head of the affiliated institution, the FSS Governor. For an FSS retiree to be re-employed in the financial sector, they must obtain approval from the FSS Governor and submit an application to the Public Officials Ethics Committee for approval. The committee generally grants 'eligible' or 'approved' decisions when the affiliated institution head submits an opinion stating no work-related connection.

For example, before the savings bank crisis occurred in 2009-2010, many FSS retirees were re-employed in savings banks, and the opinion letters prepared by the FSS at that time mostly stated no work-related connection.

Assemblyman Yoon Chang-hyun pointed out, "It is not problematic for retired FSS employees to utilize their expertise for re-employment, but advancing to executive positions such as financial sector auditors can lead to parachute controversies."

Concerns Over Using Networks as 'Shield Against Sanctions'... "System Overhaul Needed"

◆ Not a ‘Shield Against Sanctions’ for Financial Companies = Experts acknowledge that it is not entirely negative for former FSS officials to utilize the expertise they have accumulated over years of financial supervision work, but they warn that the use of personal networks as a ‘shield’ cannot be overlooked. Especially considering last year’s large-scale financial accidents such as the overseas interest rate-linked derivative-linked funds (DLF) and Lime private equity funds, which led to a series of disciplinary actions against financial companies, suspicions about the hiring intentions are inevitable.

Professor Ji-yong Seo of the Department of Business Administration at Sangmyung University said, "It is difficult to say that re-employment of former FSS personnel based on their expertise is a big problem," but added, "Since many former FSS officials are re-employed mainly as standing auditors, it is necessary to examine whether they are properly fulfilling their role as watchdogs."

Professor Seo further stated, "We also need to consider the intentions of financial companies that want to hire former FSS personnel," adding, "It is undesirable for financial companies to hire retirees as shields rather than for their expertise."

For these reasons, voices calling for a system overhaul related to the re-employment of retired public officials are emerging.

Professor Min Se-jin of the Department of Economics at Dongguk University explained, "While the re-employment of FSS retirees can lead to collusion with the private sector, the reality is that financial companies are the only places they can go. Although sensitive issues such as collusion controversies with private companies and fairness with general public officials are sharply conflicting, since the re-employment of retirees is becoming a topical issue of the times, it is time to overhaul the related system."

A representative from the Financial Consumer Federation also argued, "The current system is merely a formality for FSS retirees to be re-employed," and insisted, "Since the wrongful proliferation of Geumpia can hinder the development of the financial industry, the reasons for approval by the Public Officials Ethics Committee should be transparently disclosed to a reasonable extent."

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