Posted on : Jun.21,2006 11:24 KST
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Byun Yang-ho, former financial policy director at the Ministry of Finance and Economy, being taken into custody on June 14. He is charged with accepting a bribe from Hyundai Motor Group while in office. Seoul/Yonhap
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Though the Board of Audit and Inspection (BAI) found against Korea Exchange Bank in its investigation of the bank’s sale to the U.S. private equity fund Lone Star at an artificially low price in 2003, many point to the involvement of the Ministry of Finance and Economy (MOFE) in sanctioning the sale.
Rep. Shim Sang-jung of the progressive Democratic Labor Party (DLB) called this incident the result of the "Mofia," a manipulation of the finance ministry’s initials into a word resembling the Mafia. Rep. Shim was referring to former members of the ministry who still exert influence on its proceedings. Former MOFE officials dominate organizations under the ministry, as well as parts of the business world.
Decision to sell the government-run bank was made in secret among the MOFE, the Finance Supervisory Commission and a few executives of Korea Exchange Bank (KEB), according to the BAI investigation. In addition, the Dallas-based fund Lone Star was approved for largest shareholder status by directors of the MOFE. Unless the ’Mofia’ played a role, KEB would not have been sold to Lone Star at such an incredibly low price. The sale required former financial bureaucrats of the MOFE to dominate key positions in the national economy.
According to Rep. Shim’s data, former finance ministry officials are taking up positions in organizations related to domestic finance, such as public enterprises and commercial banks. A few years ago, when a non-MOFE person became president of a public enterprise and certain business cooperation was not proceeding as expected, unionists demanded to bring in a ’powerful former MOFE official’ as the firm’s head. Because of this sentiment, law firms and consulting firms are positive about bringing former high-ranking financial officials into their ranks.
When former minister of finance and economy Lee Hun-jae and incumbent Finance Minister Han Duk-soo left their official positions, they returned to public office after serving at the Kim & Chang law firm as advisors.
The so-called "Lee Hun-jae team," which is under suspicion for exerting influence in the KEB sale, could be called the ’Mofia’ within the ’Mofia.’ The banking industry thinks that former vice-premier Lee had unusually powerful control over important financial matters, both when he held his official position and when he retired from public duty.
A MOFE official said, "When we step up transparency and procedural legality, the ’Mofia controversy’ will disappear. In the process, however, we should be careful that there are no government employees who ignore their duties and fall into that pattern."
