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Mitigation of disciplinary action against abuse of power in the port corporations to be prohibited

  • Date2020-08-10
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Mitigation of disciplinary action against abuse of power in the airport or port corporations to be prohibited

- ACRC issued recommendations to improve 54 unfair and corruption-causing factors inherent in bylaws of eight airport/port corporations through Corruption Risk Assessment -

July 29, 2020

Anti-Corruption and Civil Rights Commission

The Republic of Korea

Recommendations to improve bylaws of airport/port corporations have been made, which include strengthening the internal rules of airport/port corporations to prohibit a personnel committee thereof from mitigating disciplinary action against unfair practice of official authority (abuse of power) by its employees.

The Anti-Corruption and Civil Rights Commission (ACRC, Chairperson Jeon Hyun Heui) conducted the Corruption Risk Assessment (CRA) on 816 bylaws of eight public institutions in the airport/port area, such as Incheon International Airport Corporation (IIAC) and Busan Port Authority (BPA), and offered 21 improvement tasks along with 54 recommendations in three areas, including improvement for unfair performance of duties.

* The revision of the Act on the Prevention of Corruption and the Establishment and Management of Anti-Corruption and Civil Rights Commission (Oct. 2019) has provided a legal ground for issuing recommendations to improve corruption-causing factors inherent in bylaws of public institutions under the Act on the Management of Public Institutions and local public corporations under the Local Public Enterprises Act.

Major cases of recommendations to improve bylaws of the aforementioned public corporations are as follows: first of all, as the interest rates for the installment payment of the airport facilities usage fee were too high (6% for IIAC and 4% for KAC), ACRC issued a recommendation to airport corporations to ease the burden of the airport facility users such as airlines, etc. by cutting the interest rates to a reasonable level based on the interest rates publicly notified under the State Property Act (COFIX* on monthly acquired new funds, 0.89% as of June).

* COFIX: cost of funds index is a benchmark lending rate for mortgage loans.

In addition, ACRC also recommended that airport corporations let duty free shop operators decide voluntarily whether to participate in joint marketing of commercial facilities at the airport, make it obligatory to make written agreements regarding the items of understanding for joint marketing, and put a ceiling on the annual marketing cost sharing ratio to lower the burden of the lessee.

< Major contents of ACRC recommendations >

1. Improving unfair practices of duties (8 tasks, 20 recommendations)

□ Lowering the burden of airport facility users by cutting the interest rates for the installment payment of airport facilities usage fee (IIAC, KAC)
 ○ When airlines, etc. pay airport facilities usage fee in installments to the airport corporations, the interest rates for such installment payment is too high (6% for IIAC, 4% for KAC), so it was recommended that the rates be cut to a reasonable level given the publicly notified interest rates under the State Property Act (COFIX* on monthly acquired new funds, 0.89% as of June).

  * Cost of Funds Index acts as a cost of funding benchmark for all banks in Korea

□ Lowering the burden of duty free shop business operators by rationalizing the costs of joint marketing for commercial facilities at the airport (IIAC, KAC)
 ○ ACRC recommended that airport corporations should make it voluntary, rather than mandatory, for duty free shop business operators to participate in joint marketing of commercial facilities at the airport*, make written agreements regarding mutually agreed items of understanding for joint marketing, and put a ceiling on the annual cost sharing ratio.

* The duty to actively participate in joint marketing according to general terms of contract → the duty to reply after review
□ Improving the standard for payment of penalty for breach of contract upon cancellation of port facility use (BPA)
 ○ The penalty for breach of contract or cancellation fee imposed upon cancellation of a contract to rent a facility such as the convention hall at the port, etc. was excessive (contractor should pay 20% of the rental fee even when cancelling or terminating the contract 90 days before the designated date), and ACRC recommended that the penalty be lowered to a reasonable level considering the consumers dispute settlement standard* (Fair Trade Commission’s Notification).

* As per the consumers dispute settlement standard, in the case of a contract to rent a wedding convention, deposit is refunded upon cancellation of a contract 90 days in advance

2. Improving transparency in personnel management (7 tasks, 19 recommendations)

□ Expressly stipulating those subject to restriction on promotion and extending the period for restriction (5 institutions including Incheon Port Authority)
 ○ ACRC recommended that bylaws should more expressly stipulate that the promotion of employees for whom the process to take disciplinary action is underway should be restricted, and the additional period for restriction on promotion of those involved in irregularities such as bribery and embezzlement of public funds, etc. should be extended (from 3 months to 6 months).
□ Preventing abuse of right to take disciplinary action through expansion of those subject to prohibition on mitigation of disciplinary action due to reward or prize (6 institutions including IIAC)
 ○ ACRC recommended that employees who unfairly exercised official authority (abuse of power) should be excluded from the scope of those subject to mitigation of disciplinary action due to commendation of the head of the institution, except executives at managerial level or above.

3. Strengthening the system for prevention of conflicts of interest (6 tasks, 15 recommendations)

□ Increasing transparency in the operation of the incentive payment system for cargo attraction (5 institutions including IPA)
 ○ ACRC recommended that institutions should prepare a tool to prevent conflicts of interest when institutions organize and operate a deliberative committee for the payment of incentives for cargo attraction, and provide a legal ground for the regular assessment and analysis of the effectiveness of the incentive system.
□ Enhancing transparency in the performance of duties by increasing the number of outside experts in the proposal evaluation committee (KAC, IPA)
 ○ ACRC recommended that more than the majority of the member of the committee for the evaluation of a negotiated contract proposal should be comprised of outside experts.

 

ACRC established a plan to conduct a Corruption Risk Assessment on bylaws of public institutions last march and organized a ‘task force for the bylaw improvement review’ in conjunction with public institutions to conduct the CRA based on a multidimensional analysis of ▴internal and external audit results of each institution, ▴press reports, and ▴major issues, etc.

In addition, through People’s Idea Box, an online public communication channel, ACRC collected people’s opinions about unfair and unreasonable practices that they encounter in their everyday life, and came up with reasonable recommendations through regular communication with public institutions being assessed.

Following the issuance of recommendations to public institutions in the airport and port sector this time, ACRC plans to continue to offer recommendations on improvement for bylaws of public institutions in the transportation and community development sectors, including Korea Railroad Corporation, Korea Expressway Corporation, Korea Land & Housing Corporation, and Seoul Housing & Communities Corporation.

ACRC Chairperson Jeon Hyun Heui said, “ACRC will continue to issue recommendations to public institutions to improve internal rules thereof in a manner that meets people’s expectations by actively collecting and reflecting public opinions, and will create an atmosphere of active administration across the public sector by improving the standard of assessment to identify areas that raise concerns about passive administration (e.g. neglect of duties) from the early stage of the Corruption Risk Assessment.”