State developer to slash 20% jobs over land purchase scandal

Two thousand employees at South Korea’s troubled state housing developer will be out of jobs as a result of a reform triggered by a massive land speculation scandal, the government said Monday.

The Korea Land and Housing Corp. will streamline its organizational structure, cutting 20 percent of the company’s workforce, to focus on its key functions -- housing welfare and home supply. Other noncore administrative functions will be abolished or transferred to other bodies such as the Ministry of Land, Infrastructure and Transport.

The reform measures came after an interagency task force in March launched an investigation into allegations that dozens of LH employees had bought land in two cities in Gyeonggi Province shortly before the government announced a massive development project there.

Some 151 former and incumbent officials of the public corporation and their relatives have been suspected of using inside information to purchase land, according to the team’s interim investigation results released last week.

“The government views the situation as a result of the vast power and information that the agency holds, and a weak internal monitoring system that had failed to achieve transparency,” Land Minister Noh Hyeong-ouk said during a press briefing.

The scandal prompted President Moon Jae-in to issue a public apology, with former Prime Minister Chung Sye-kyun declaring war on property crime amid growing public distrust of the administration’s real estate policies and soaring apartment prices.

Created in a 2009 merger between the then-state land developer and a public housing corporation, LH now has close to 10,000 employees and 185 trillion won ($163.2 billion) of assets under management.

To prevent LH officials from sharing or leaking insider information, all employees will be subjected to a mandatory registration of assets and will be banned from acquiring real estate for purposes other than actual residential use.

LH’s task of conducting studies and selecting new sites for land development projects will be transferred to the Land Ministry.

To improve lax management practices, LH’s high-ranking officials will have their pay frozen for the next three years.

Talks of a structural overhaul with the ruling and opposition parties are underway, according to the ministry. The discussions include separating its land development and housing supply functions, as well as establishing a holding firm to oversee its subsidiaries.

Noh said that the ministry would seek to map out the plan by August after consultations with lawmakers, and submit a reform bill within this year as corporate restructuring proposals require parliamentary approval.

By Park Han-na (hnpark@heraldcorp.com)