"Forcing Pregnant Women to Drink"... The Overbearing Chairman Pulls All the Strings [Corruption in Saemaeul Geumgo ②]

Chairpersons' Strong Exercise of Power
Lack of Internal Control System
Repeated Collusion Between Delegates and Indirect Election Method
Direct Election Bill Passed but Flaws Remain

#Employee A of Saemaeul Geumgo could no longer endure the chairman's tyranny and sought help from the public interest organization ‘Workplace Bullying 119’ last year. A said, "The chairman forced pregnant employees to work overtime and drink alcohol, made employees carry moving boxes, and even deliver wedding invitations for his children."

#Chairman B of a Saemaeul Geumgo in Daejeon was prosecuted for forcing employees to pay holiday gift bribes and political donations. He received about 9.7 million KRW worth of money and goods over two years, and reportedly gave personnel disadvantages or harmed employees who did not comply.

Autocratic Chairmen Running the Management

Corruption scandals surrounding Saemaeul Geumgo, such as employees embezzling 4 billion KRW and a 38 billion KRW fraudulent loan using fake diamonds, have been incessant. Although the funds of ordinary people have accumulated to an asset size of 239 trillion KRW, outdated corruption and bad practices are repeated every year. According to statements from Saemaeul Geumgo and industry insiders on the 22nd, the biggest causes are the ‘autocratic chairmen’ and lack of internal control systems.

Saemaeul Geumgo operates with chairmen managing independently like CEOs. The Saemaeul Geumgo Central Association does not operate branches separately but acts as a kind of control tower. According to Saemaeul Geumgo, there are 1,297 headquarters and 3,218 branches nationwide. Each of nearly 1,300 headquarters is run by a chairman. Branches are considered sub-offices of headquarters. The chairmen of each Geumgo exercise unique and powerful authority. An official from Saemaeul Geumgo said, "Since chairmen control personnel matters, the staff almost always follow the chairman’s will," adding, "Even executive managers at the senior level must leave if they displease the chairman, so (if they are on the chairman’s side) they often turn a blind eye to corruption."

In particular, the method of electing chairmen and the central association president has been pointed out as a cause of repeated bad practices. Until now, chairman elections were conducted by an ‘indirect election’ system. Delegates are elected from members of each regional Geumgo, and these delegates elect the chairman. This leads to collusion between chairmen and delegates, resulting in corruption. According to the current Saemaeul Geumgo Act, the chairman’s term is four years and reappointment is possible. However, it is common for chairmen to continue to dominate as full-time directors after their term ends.

Chairmen sometimes become entrenched local powers. A local council member said, "Some chairmen without financial experience mobilize acquaintances to open 100,000 KRW accounts and get them elected as delegates," adding, "Although there are auditors in the Geumgo, they are practically running mates of the chairman, so it is difficult to play a checking role."

Although the Saemaeul Geumgo Central Association is the control tower supervising chairmen, its structure does not allow strict internal control. The central association president is also elected by delegates chosen from frontline chairmen, causing ongoing controversies. Park Cha-hoon, the current president of the Saemaeul Geumgo Central Association, was fined in the first trial for distributing gift sets and golf course vouchers to delegates ahead of the election and is awaiting the second trial.

[Image source=Yonhap News]

‘Direct Election’ Bill Passed but Enforcement Decree Has Loopholes

The National Assembly has also rolled up its sleeves to eradicate the bad practices of Saemaeul Geumgo. The amendment to the Saemaeul Geumgo Act, proposed by Park Jae-ho of the Democratic Party, passed the plenary session last year. According to the amendment, from 2025, members nationwide will directly elect Saemaeul Geumgo chairmen, and the central association president will also be elected through direct elections. Election management will be entrusted to city and county election commissions.

However, there are still loopholes in the enforcement decree, making it difficult to fundamentally solve chairman corruption and internal control issues, according to Saemaeul Geumgo employees. According to the enforcement decree of the Saemaeul Geumgo Act implemented in April, regional Geumgo with total assets under 200 billion KRW are not required to directly elect their chairmen. They can choose between direct election and delegate election. About 70% of regional Saemaeul Geumgo have assets under 200 billion KRW.

Lee Hee-dong, chairman of the National Saemaeul Geumgo Labor Union, said, "Chairmen hold absolute power including personnel authority," and criticized, "Although the law was amended, it became meaningless as most chairmen can choose the indirect election system."

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