SEOUL, March 30 (Korea Bizwire) — South Korea banks and other financial companies have hired former government officials to fill some 30 percent of outside director positions, industry data showed Monday, amid criticism that outside directors are not living up to their roles.
According to the data compiled by CEO Score, the number of outside directors hired by 43 financial companies totaled 197, up 7 from the end of September.
Of the newly hired, 53, or 26.9 percent, are former high-ranking government officials who have worked at tax agencies and financial authorities. The figures remained little changed compared with last year’s readings.
Professors, former prosecutors and journalists filled the rest, the data showed.
Outside directorship has long been fodder for corporate critics who see the invited members as nothing more than friends and cronies of company owners or presidents to rubber stamp their managerial decisions.
In particular, local companies’ preference for ex-government officials as outside directors 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, analysts said.
“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.