‘Mofia’ on the wane under Korean president Park

2014-03-07 17:55

‘Mofia’ on the wane under Park

By Kim Tae-gyu
President Park Geun-hye has been criticized for poor personnel choices after a number of people she appointed to key posts were sacked or had to quit for a variety of reasons.
But she deserves credit for not pursuing a pattern her predecessors favored ― allowing senior finance ministry officials to be parachuted into top posts at banks and other financial institutes, analysts said.
In the past, retiring ministry officials occupied top bank posts ― leading to the creation of the “mofia,” a portmanteau coined from “ministry of finance” (MOF) and “mafia” reflecting their strong network and industry-wide influence.
However, things are now very different since Park took office a year earlier because the top posts of most big banks and financial groups are held by industry experts or insiders not former government officials parachuted in.
“During the former Lee Myung-bak administration, the stewardship of major financial companies was dominated by ex-public servants of the finance ministry,” Prof. Kim Sang-jo of Hansung University said.
“This is a good trend, which I hope will continue. Such efforts deserve good marks. The windows of job opportunities domestic banking groups seem to be closing for retiring finance ministry officials.”
In particular, analysts praised the recent designation of a former Bank of Korea deputy governor as its new chief.
Earlier this week, President Park nominated Prof. Lee Ju-yeol at Yonsei University as governor of the central bank. After hearings at the National Assembly, he will take office next month.
He entered the BOK in 1977 and worked there for 35 years to become the second-in-chief of the bank before quitting in 2012 to move to Yonsei University in Seoul the following year.
Other major commercial banks including Shinhan, Hana and Woori as well as their holding companies also promoted insiders to the top jobs. The government holds a controlling stake in Woori. Shinhan and Hana are private entities.
There are, however, two exceptions:  former vice finance ministers Lim Young-rok and Yim Jong-yong are chief executives at KB Financial Group and Nonghyup Financial Group, respectively.
The tendency is not an isolated case to the financial segment. In picking ministers or vice ministers, Park has adopted a similar principle.
Park’s aides said that the exclusion of “mofia” resulted from her unique philosophy.
“When making appointments, Park gives top priority to expertise and the morale of organizations. To meet both criteria, it is better to promote insiders to top jobs,” said a Cheong Wa Dae official who asked not to be named.
Yet, Prof. Kim warned against any complacency.
“I am concerned that Park might change this principle later in her term just as many of her predecessors did,” said Kim who is regarded as a progressive economist.
“Another worry is that she may not know enough candidates to head banking groups so might have no alternative but to find them among insiders. If that is the case, things will not be as good as they seem now.”