South Korea's 10 largest companies have hired former government officials to fill 40 percent of new outside director positions, industry data showed Monday, rekindling criticism that the companies may use them as protectors against the government.
According to data, the number of outside directors to be hired by this year's shareholders' meetings totaled 119 at the top 10 conglomerates led by Samsung Group and Hyundai Motor Group. Of the newly hired, 47, or 39.5 percent are former high-ranking government officials, retired judges, prosecutors and senior financial or tax officials.
Last year, the figure stood at 50, or 39.7 percent.
The companies are scheduled to hold their regular shareholders' meeting later this month.
Eighteen people were from government ministries and 12 were from the judiciary circle, with eight from the Fair Trade Commission, seven from the National Tax Service, and two from the Financial Supervisory Service.
Among the 18 ex-government officials, 12 were former ministers or former vice ministers, compared with six the previous year.
Samsung Life Insurance Co., the No. 1 life insurer, named Park Bong-heum, a former minister of the Ministry of Planning and Budget, as its outside director, while Noh Min-ki, former Vice Minister of Ministry of Labor, went to Samsung SDI Co., Samsung Group's battery producing unit.
Kia Motors Corp., an affiliate of Hyundai Motor Group, has designated former Justice Minister Lee Kwi-nam as an outside director.
Market watchers say such nominations will hurt the interests of investors and employees of the companies as those hand-picked outside directors will likely fail in their duty of preventing mismanagement and maintaining checks and balance.
"Companies have been inclined to name powerful figures as their outside directors and use them as a buffer in the board of directors," said Yoon Jin-su from the non-profit Corporate Governance Service. "Shareholders are needed to take action against such moves." (Yonhap)