(EDITORIAL from the Korea Herald on Nov. 19)

Corruption probes

The prosecution's announcement on the results of its six-month investigation into
corruption at state-owned corporations was surprising because of the large number
of officials prosecuted, their high status, the huge amounts of money involved,
and the sophisticated methods used in bribery and diversion of public funds.

Serious corrupt practices have been uncovered in more than 30 corporations, or
about 10 percent of the total state-run or state-invested firms, and they
included the six largest organizations in terms of assets.
Among the 250 people who were criminally charged were seven CEOs and 26
executives. Eighty-two were indicted under detention. The sons of former chiefs
of Korea Land Corp. and the Military Personnel Mutual Fund were arrested for
peddling the influence of their fathers. Several present and former lawmakers
were accused of receiving money from businessmen who sought their help in trying
to win contracts.
Looking at the prosecution revelations, one is particularly dismayed to see that
the moral laxity among employees in those organizations that are supposed to
serve public interest was no less -- sometimes far more -- serious than their
private-sector counterparts.
Considering the generally greater job security and better pay scales in those
public corporations, the high degree of corruption in their employees is to be
deplored.
If we can find no particular reason that public firms should be more vulnerable
to corruption, the root problem must lie in the lack of an effective system of
oversight in those organizations.
Many of the CEOs and executives are political appointees who are rarely equipped
with professional knowledge in the businesses they are assigned to. Career
employees band together to cover up each others' faults more often than not.
Under such circumstances, bad traditions remain in place until major scandals are
exposed.
Privatization is one way of uprooting corruption and rationalizing operations. It
was one of President Lee Myung-bak's major election pledges, but implementation
of the policy has been delayed due to labor and political resistance and the low
profitability of many of those firms. Some have to remain under government
control because of the nature of their business.
Yet, something should be done to straighten discipline and increase efficiency at
state-owned corporations. This is better than having the law enforcement
authorities occasionally pick up wrongdoers, who might consider themselves simply
unlucky.
Fool-proof internal checks should be established, while the state watchdog should
take closer and constant look into their operations, especially into the bidding
process. Special measures are needed to better protect whistle-blowers.
President Lee should pay special attention to the cleaning up of state-run
corporations and press for their restructuring as one of the major tasks to
overcome the current economic difficulties. On top of that, he is advised to be
more cautious in appointing chief executives.
(END)