Korean Inc. hires ex-government officials as outside directors: Study

[Photo by MK DB]

Four out of 10 outside directors that joined South Korea’s top 30 conglomerates this year were former high-ranking government officials including former prosecutors, a study showed Tuesday.

According to an analysis by Leaders Index, a corporate data researcher, on the professional backgrounds of 147 outside directors of 219 companies under the country’s top 30 conglomerates this year, 50, or 34 percent were former high-ranking officials at the government, up 3.5 percentage points from 30.5 percent last year.

Among the ex-government officials, 12, or 24 percent, were part of the prosecution, 7 of the National Tax Service, 6 of the Court, and 4 of the Fair Trade Commission.

Many former high-level prosecutors joined private companies, including Moon Mu-il, a former chief prosecutor that was appointed as an outside director of Samsung SDS Co.

Hanwha Systems Co. and Hanjin Transportation Co. named Koo Bon-seon, a director-level prosecutor, as their outside director. Koo and President Yoon Suk Yeol are known to have completed the training courses at the Judicial Research and Training Institute in the same year.

Lotte Chemical Corp. hired Cha Kyung-hwan, former chief of the Suwon District Prosecutors’ Office, as an outside director, while Hyundai Wia Corp. appointed Lee Dong-ryel, former head of the Seoul Central District Prosecutors’ Office.

Young Poong Group named all three of its new outside directors as those with government backgrounds. For Shinsegae Group, eight out of ten new outside directors were former government officials.

Of the 147 outside directors, 32, or 21.8 percent, had business backgrounds, up 15.8 percentage points from 6 percent last year. The number of outside directors with academic backgrounds fell by 5.8 percentage points to 25.9 percent during the same period.

“Major companies prefer business professionals to candidates with academic backgrounds,” said an unnamed official from Leaders Index.

“A rise in executives with various backgrounds has reduced resistance against outside director candidates, with an increased number of female outside directors,” it said.

Of the 147 outside directors, 18.4 percent were female.