Increasing Number of “Bureaucratic Mafia” Outside Board Members: One in Three Was a Former Prosecutor

The Seoul Central District Prosecutors’ Office in Seocho-gu, Seoul. Lee Joon-heon

This year, 38.8% of newly appointed outside board members of major corporations in South Korea turned out to be former bureaucrats, and one in three of these directors had served in the Prosecution Service, just like President Yoon Suk-yeol.

The Kyunghyang Shinmun analyzed the professional history of 116 candidates for outside board members (reflected multiple times when the candidate served as an outside director of more than one company) of 180 listed companies affiliated to the nation’s top thirty business groups newly appointed in the annual general meeting of shareholders this year. According to the results of the analysis on March 19, forty-five were former government officials, accounting for 38.8% of the directors newly appointed this year. The academia, which had provided the greatest number of outside board members in the past, fell behind the government to second place with forty (34.5%).

The number of government officials increased because a large number of former prosecutors were appointed directors. Among the outside directors who formerly served in the government, fourteen (31.1%) were former prosecutors. Samsung SDS appointed Moon Moo-il, former prosecutor general, as its outside director on March 15. HL Mando and Hanwha Systems also nominated lawyers Kang Nam-il and Koo Bon-sun, respectively, for their outside directors. These men graduated from the same class of the Judicial Research and Training Institute as President Yoon and served as deputy prosecutor general of the Supreme Prosecutors’ Office.

Senior prosecutors Yi Dong-yeol, who once served as chief of the Seoul Western District Prosecutors’ Office (Taihan Cable & Solution, Hyundai WIA); Cha Kyung-hwan, former chief of the Suwon District Prosecutors’ Office (Lotte Chemical, Hyundai Construction Equipment); Kwon Soon-bum, former chief of the Daegu High Prosecutors’ Office (Korea Zinc); and Yi Sang-ho, former chief of the Daejeon District Prosecutors’ Office (E-mart) were also nominated as outside board members of major companies.

Six former officials from the court, the Fair Trade Commission and the Ministry of Economy and Finance each were also nominated for new outside board members. In addition, five new outside directors had previously worked in the National Tax Service and four in the Ministry of Trade, Industry and Energy. These government organizations are judicial or regulatory agencies that directly exert influence over corporate management.

Businesses have accelerated efforts to bring in former prosecutors after President Yoon emerged as a strong presidential candidate last year. For instance, Kim Joon-gyu, former prosecutor general (Samsung Card); Cho Sang-chul, former chief of the Seoul High Prosecutors’ Office (Lotte Shopping); and Kwon Ik-hwan, former chief of the Seoul Southern District Prosecutors’ Office (Hanwha) were appointed outside directors of major companies.

Roh Jong-hwa, who sits on the policy committee of the Solidarity for Economic Reform, said, “If companies intentionally appoint former prosecutors to get closer to the government rather than to improve corporate governance, it could undermine the purpose of introducing outside directors.