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[Editorial] Symbiotic ties

On Monday, the National Tax Service summoned senior officials and regional office heads to a conference at short notice. That was unusual. The usual practice is to hold such a conference annually, at the outset of each year.

Even odder was that there was no urgent issue to deal with. Instead, what the participants were told was to refrain from arranging jobs for their retiring colleagues because it was banned under a recently revised code of conduct.

But the tax office had good reason to stress the ban directly. It did not want to follow the footsteps of the Financial Supervisory Service, which became a target of public criticism when many of its retired regulators, hired as auditors of savings banks, were found to have helped their employers hide their fraudulent business practices.

An inquiry into the latest financial scandal involving Busan Savings Bank uncovered that the financial watchdog recommended its retiring senior officials as auditors of savings banks and other non-banking financial institutions.

What the retirees did when hired as auditors was to lobby the financial regulators against delving into the fraudulent business practices of their employers. Of little concern to them was their job of preventing them from falsifying financial statements. No wonder so many savings banks went belly up.

Under these circumstances, the tax office took preemptive action. It needed to take every caution possible. All the more so, given that a recent prosecutorial investigation found that an incumbent tax official helped a former commissioner take in hundreds of millions of won as advisers to business enterprises.

It is not the tax office and the financial watchdog alone which say to businesses, “You scratch my back and I’ll scratch yours.” Even more worrisome are former Cabinet ministers, judges and prosecutors on the payrolls of Kim & Chang and other large law firms.

The going rate of pay is reportedly 500 million won a year for a former Cabinet minister. Former vice ministers and other senior officials make less. Given that law firms are not charities, they recoup what they pay. These ex-officials may work as their lobbyists or return their favors when they are appointed to Cabinet or other influential posts.

An incumbent government official cannot easily dismiss their request for a favor, given the enormous influence they are capable of exercising though their extensive “old boy network.” Moreover, he cannot rule out the possibility of serving any of them as his boss.

A case in point is a former vice minister of land, transport and maritime affairs. Kim & Chang paid him more than 25 million won a month when it had him on its payroll from December 2010 to April this year. Now he is awaiting a confirmation hearing as the nominee of minister of land, transport and maritime affairs.

Another problem lies with former judges and prosecutors employed by law firms. They are paid handsomely for their service as attorneys at law. For a former Supreme Court justice, the going rate of pay is reportedly as high as 6 billion won per year.

The high level of pay cannot be explained unless they are given favors in court rulings. If not, the legislature would not have revised the law to ban former judges and prosecutors from taking cases being tried or investigated in the court or the prosecutors’ office where they had worked in their final year before retirement.

Legal experts say the revision contains serious loopholes, including no clause on how offenders are to be punished. These loopholes should be closed. It is the same with the law on the ethics of public officials, which provides no effective barrier against their symbiotic ties with businesses.
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