As fees eat into donations to military units, Kim Jae-seop pushes for direct giving

[Financial News] Kim Jae-seop, a People Power Party lawmaker, said on the 11th that he would pursue an amendment to the law to allow banks in which the state is a major shareholder, including Industrial Bank of Korea (IBK), to donate directly to the state for public-interest purposes such as improving the welfare of service members.
Rep. Kim introduced as the lead sponsor that day an amendment to the Banking Act containing these provisions. The bill would limit the scope of permitted direct donations by presidential decree and require banks to promptly disclose the purpose and scale of donations on their websites.
Under current law, banks are prohibited from transferring assets to major shareholders without compensation. As a result, IBK, whose major shareholder is the state, cannot deliver donations for military units directly to the state and instead pays them through a separate public-interest corporation. In the process, some of the donations are spent on intermediary costs, and concerns have been raised about the fairness and transparency of the recipient organization selection process.
At a National Assembly audit, Rep. Kim raised concerns about how IBK selected the organization to deliver donations for military units. At the time, IBK changed its existing recipient organization without conducting an open recruitment process or a separate screening or evaluation. It also failed to keep even evaluation scores or meeting minutes that could establish the basis for its selection.
The newly selected recipient organization was paid a certain percentage of the donations it delivered as project expenses. The larger the donations, the higher the project expenses. This has prompted calls for efforts to improve the fairness of recipient organization selection and the transparency of how donations are spent.
Rep. Kim said, “It is unreasonable for the bank to decide which military units receive the donations and how much they receive, yet route the money through a separate corporation and even pay a fee just to deliver it,” and stressed, “We must first fix the system that spends donations meant for service members on unnecessary intermediary costs.”

[email protected] Lee Hae-ram Reporter