Korea's transport Ministry under fire for excessive debt

Korea's transport Ministry under fire for excessive debt
South Korea's Transport Minister Suh Seoung-hwan.

The combined debt held by nine major public firms affiliated with the Ministry of Land, Infrastructure and Transport reached 201 trillion won(S$239 billion), over 40 per cent of the current state-held debt, data from the ministry showed this week.

Due to the vast debts, the agencies made combined daily interest payments of up to 18.4 billion won, according to a recent ministry report submitted to the regular parliamentary audit.

"The enormous amount of debt owed by the public organisations and the lax management has increased the burden on the nation's taxpayers," said Rep. Lee Hun-seung of the ruling Saenuri Party.

To minimise the tax burden and streamline the organisation, he urged the ministry to carry out sweeping reforms to improve its financial structures to become more financially independent.

Out of the nine debt-ridden public companies, the Korea Land & Housing Corp., was the biggest debtor, with outstanding debt of 142 trillion won. The amount accounts for 70 per cent of all debt held by Transport Ministry-affiliated public companies.

LH also had the largest debt-to-equity ratio with 458 per cent, followed by Korea Railroad Corp. and Jeju Free International City Development Center.

Despite LH's poor performance, including that of its affiliate firms, the company doled out up to 6.6 billion won in incentive payments to them, according to Lee Mi-kyung, a lawmaker of the main opposition New Politics Alliance for Democracy.

Ahead of the ministry audit, it was also found that nearly half of the ministry's high-ranking officials took new jobs at the ministry-affiliated organisations or related private companies after they retired.

According to Rep. Kim Sang-hee of the opposition party, 116 of 247 former officials, or 47 per cent, were employed by agencies affiliated with the ministry, including Korea Cadastral Survey Corp. and Korea Infrastructure Safety and Technology Corp., between 2009 and September.

"Reemployment of retired government officers in senior positions at related public and private organisations is a serious problem, as it could cause a back-scratching alliance of government and those organisations," the lawmaker said.

From 2009 to 2013, an average of 20 officials landed posts at related companies and organisations each year, while 14 former ministry officials had landed jobs after retiring this year, she added.

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