Rehired Former Financial Supervisory Service Employees: 7 out of 10 Join the 'Financial Sector' (Comprehensive)

Severe Job Shortage Last Year with 138.5% Increase Compared to Previous Year
83% of Retiree Employment Reviews 'No Job Relation · Employment Possible'

[Asia Economy Reporters Kwangho Lee and Kiho Sung] Over the past five years, 7 out of 10 retirees from the Financial Supervisory Service (FSS) have been re-employed by private financial companies. In particular, since the inauguration of the Moon Jae-in administration, the re-employment rate of the so-called Geumpia (FSS + Mafia) has increased annually, with a more than threefold surge last year. Experts point out that considering the recent job market, the increase in their employment rate could spark fairness controversies. They also advise that the system related to the re-employment of FSS retirees needs to be reorganized.

◆ 7 out of 10 retired executives re-employed in the financial sector = On the 31st, Yoon Chang-hyun, a member of the National Assembly’s Political Affairs Committee from the People Power Party, revealed data received from the FSS on the ‘2016?2020 re-employment status of retirees.’ According to this, over the past five years, a total of 79 employees at grade 4 or above who retired from the FSS were re-employed after review by the Public Officials Ethics Committee. Among them, 54 retirees moved to the financial sector. This means that 7 out of 10 were re-employed by financial companies.

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 re-employed retirees from the FSS was 22 in 2016, dropped to 4 in 2017, then rose to 10 in 2018, 13 in 2019, and 31 last year.

Among those reviewed by the Public Officials Ethics Committee, the largest number re-employed were at securities firms, totaling 15. 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 employees moved to financial-related organizations such as associations and research institutes, while the remaining 25 moved to large corporations.

Under the current Public Officials Ethics Act, FSS employees at grade 4 or above are, in principle, prohibited from re-employment in financial companies for three years from their retirement date. This is to prevent improper 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, among the 54 employees (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 having work-related connections because the possibility of influence was considered low.

The high rate of eligibility and approval is largely due to the decisive role of the opinion letter from the head of the affiliated institution, the FSS Governor. For FSS retirees 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 permission. The committee generally grants eligibility or approval if the head of the affiliated institution submits an opinion stating there is no work-related connection.

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

Concerns Over Using Personal Networks as a 'Shield Against Sanctions'... "System Reorganization Needed"

◆ Not a ‘Shield Against Sanctions’ for Financial Companies = Experts acknowledge that it is not entirely negative for former FSS officials to leverage the expertise they have accumulated over years of financial supervision work. However, they warn that the use of personal networks as a ‘shield’ cannot be overlooked. 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 officials based on their expertise is a major problem itself," but added, "Since many former FSS officials are re-employed mainly in standing auditor positions, 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 officials," adding, "It is undesirable for financial companies to hire retirees not for their expertise but as a shield."

For these reasons, calls for system reorganization 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 with private companies and fairness with general public officials are sharply contested, the re-employment of retirees has become a topical issue of the times, so system reorganization is necessary."

A representative from the Financial Consumer Federation also stated, "The current system is merely a formality for FSS retirees to be re-employed," and argued, "The improper proliferation of Geumpia could hinder the development of the financial industry, so 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.