‘MOFIA’ keeps financial sector under thumb

Retired financial bureaucrats given lifelong privilege to lead public agencies, banks by nose


It is well known that former financial bureaucrats dominate top positions at Korea’s public financial institutions and banks controlled by public agencies.

Recent history shows that only a fraction ― about 3 percent ― of former and incumbent chief executive officers at 11 public financial institutions and three “special” banks were chosen from the institutions’ ranks.

Bureaucrats who built their careers and networks at the Ministry of Finance mostly during the ’70s and ’80s and later moved on to its subordinate agencies are widely referred to as “MOFIA,” a combination of the ministry’s name and “mafia,” for their lifelong connections and power.

The so-called MOFIA have reigned over the Export-Import Bank of Korea, Korea Development Bank, Industrial Bank of Korea and public institutions such as the Korea Deposit Insurance Corp., Korea Asset Management Corp. and the Korea Exchange for decades since their establishments.

KDB, for instance, has not had a single CEO from within the bank in its 58-year history.

Of the 196 former and incumbent CEOs at the 14 institutions, 92 were ex-bureaucrats from the Ministry of Finance.

Twenty-nine were from banks, 25 others from the Bank of Korea, nine from the Financial Supervisory Service and seven from the Financial Services Commission.

Most of those who came from the FSC had previously served at the Ministry of Finance for decades. Five of the nine from the FSS did their times at the Finance Ministry too.

Including them, the number of MOFIA-turned-CEOs adds up to 104, or 53.1 percent of total.

Currently, eight of the 14 CEOs are MOFIA.

All the nine former and incumbent heads of the Korea Technology Finance Corp. were from the ministry. Ten out of 17 chiefs so far of the Korea Credit Guarantee Fund and Eximbank were their MOF alumni. Seventeen of 35 at the Korea Exchange, nine out of 19 at KAMCO, seven out of 12 at Koscom, and both the former and incumbent CEOs of the nascent Korea Finance Corp. came from the ministry.

Only six people from the companies’ own staff have managed to climb up to CEO so far. IBK’s Cho Jun-hee is one of them.

Brokerages and the military produced six CEOs each, the National Tax Service and other government ministries four each.

Three others were formerly engaged in politics, one in the academic world and the remaining four came from other areas.

With more and more public financial institutions becoming the last paycheck provider for retired bureaucrats, many say the so-called “parachute” executives, who are appointed by their MOFIA friends, lack professionalism.

An official at Koscom, an IT solution provider for the financial sector, said it takes these CEOs from outside up to a third of their three-year term to understand their jobs and what the company does.

“These ‘parachute’ CEOs with irrelevant majors or careers keep coming to Koscom, which is an IT company. It takes them between six months to a year to learn about what the company does and what they should do,” the official said.

An MOF official said, however, that bureaucrats can still have “initiative and drive” at public institutions.

Industry insiders and observers note that the CEO recommendation committees of the public institutions and banks must be filled with “neutral” members who are free from government influence.

MOFIA rule the roost in the private sector as well, however.

The nation’s trade associations of banks, life and nonlife insurers and credit card companies are run by MOFIA ― Bahk Byong-won of the Korea Federation of Banks, Kim Gyu-bok of the Korea Life Insurance Association, Moon Jae-woo of the General Insurance Association of Korea and Lee Doo-hyung of the Credit Finance Association.

By Kim So-hyun (sophie@heraldcorp.com)