Ministry of Economy and Finance Reappointed Paid Evaluators, Heating Corporation Illegally Obtained Performance Bonuses

Audit Board Announces Results of 'Public Institution Management Evaluation System Operation Status' Audit

The Board of Audit and Inspection has revealed that the Ministry of Economy and Finance's 'Public Institution Management Evaluation' has been poorly managed. Despite the evaluation team changing the evaluation indicator grades, the Ministry failed to manage this, resulting in some public institutions receiving grades that did not reflect reality. Additionally, the criteria for verifying candidates for the management evaluation committee were relaxed, leading to the reappointment of individuals who received economic benefits from the evaluated institutions during their term. The Board of Audit and Inspection has notified the Ministry of Economy and Finance to discipline the responsible personnel.

The Board of Audit and Inspection announced the results of an audit conducted on the 23rd regarding the 'Operation Status of the Public Institution Management Evaluation System,' following ongoing concerns that the management evaluation imposes excessive burdens on public institutions and questions about its fairness.

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Since 2008, the Ministry of Economy and Finance has conducted annual management evaluations of about 100 public institutions, including public enterprises and quasi-governmental agencies. The evaluation team, composed of private experts, scores each institution based on evaluation indicators, which significantly affect employees' performance bonuses and executives' warnings or dismissals.

However, according to the recent audit report, during the 2018 management evaluation committee activities, members who received economic benefits from the evaluated institutions were reappointed. Among 53 violators in 2019, 16 and 14 were reappointed in 2020 and 2021, respectively. Regulations prohibit evaluation committee members from receiving economic benefits from evaluated institutions during their term and allow restricting appointments within five years if violated.

During the 2019 management performance evaluation, there was no verification whether the weighting of individual evaluation indicators was properly set. The Ministry of Economy and Finance did not detect errors until just before the Public Institution Management Committee meeting, even though the evaluation team set the weights of four social value-related indicators for quasi-governmental agencies differently from the standards. Moreover, when correcting these errors would have changed the comprehensive relative grades of four institutions, it was confirmed that the grades of other evaluation indicators were arbitrarily adjusted to maintain the evaluation results. As a result, the comprehensive relative grades of the Korea Radioactive Waste Agency and the Korea Rail Network Authority were higher than their rightful grades, while those of the Korea Agricultural Technology Commercialization Foundation and the Asia Culture Institute were lower than their rightful grades.

Additionally, some public institutions were found to have manipulated accounting and deceived evaluation personnel to receive higher evaluation scores. The Korea District Heating Corporation submitted false data to the Ministry of Economy and Finance for the 2018 management evaluation by calculating the 'total labor cost increase rate' differently from the standard, making it appear as if the increase rate cap was complied with. Consequently, it received a perfect score on the 'total labor cost management indicator.' The Korea District Heating Corporation received a 'C grade' in the 2018 management evaluation, and the following year, 7.8 billion KRW in performance bonuses were paid to employees. The corporation claimed the act was unintentional, but this was not accepted. The Ministry of Economy and Finance stated that, based on the audit results, it plans to revise the evaluation results through the Public Institution Management Committee's deliberation and resolution and take necessary measures such as reducing performance bonuses.

The Board of Audit and Inspection also demanded disciplinary action and warnings for three related personnel, including a division chief who improperly handled management performance evaluation tasks or failed to submit related materials, and notified the Ministry to establish thorough guidance and supervision measures for the submission of verification materials by public institutions.

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