Change the government audit system

The Kim Chang-Joon Politics and Economy Academy, which I run in Korea, holds its weekly lecture at the National Assembly Building. On my way down from the third floor after a lecture last night, I saw about 100 young people in suits standing in line at the entrance of the main hall to get their ID cards back from the information desk. The queue was so long that it nearly blocked the entrance.

Curious, I asked someone what was going on. The person looked at me rather strangely and asked if I knew the government audit of the National Assembly was under way.

It was an unfamiliar scene to me. In the U.S., I have seen the congressional building full of tourist groups, but I have never seen it so loud and busy, so full of government officials and so late at night. So, out of curiosity, I talked to some female government workers. They grumbled that they were working for a minister and that they had to work in a hotel room, probably throughout the night, to prepare the minister’s answers for the next day. Outside the building, a lone demonstrator held a placard.

The fuss around the National Assembly causes every government agency to go into a state of emergency for 20 days. In addition, some people strongly believe the heads of big corporations should be summoned to this audit hearing.

It is unimaginable in the U.S. for Congress to summon and snarl at the heads of big corporations. If private corporations did something wrong, should it not be appropriate to follow legal procedures, and then the judgment of the judicial branch, rather than bring the business chiefs to the legislative branch to yell at them?

In the United States, Congress has only once summoned and chastised the heads of a big corporation ― in November of 2008. General Motors was at real risk of bankruptcy and had asked Congress to provide 12 trillion won as a bailout loan. The General Motors executives and the other major companies in the U.S. auto industry were at the congressional hearing because they had to appeal directly to Congress ― an institution that has budgetary authority ― to get such large additional amount.

At the congressional hearing, the CEO of GM at the time, Rick Wagner, was in a sweat, and members of Congress reprimanded him. He then pleaded with Congress to help GM, a company with a 100-year history, to continue its crucial role for the U.S. economy.

Congress then criticized the auto industry representatives for using private jets to attend the hearing in Washington, D.C., while at the same time seeking financial aid. Members of Congress said the auto chiefs’ disgraceful behavior would enrage the public. Congress criticized the chiefs for their arrogance in spending $20,000 on a private jet while asking for government money. The government ordered the executives to sell the private jets and return to Detroit by bus, which they duly did.

In Korea, because the audit lasts for 20 days, government agencies only have to ride this period. In the U.S., Congress does not have a set period for its audits. Rather, it has an investigative audit office, called the GAO, which carries out inspections throughout the year. GAO has 3,400 employees and a $600 million annual budget. Government agencies and state-owned corporations tremble when the GAO shows up. Its task is to investigate thoroughly any waste of tax money or fraud against the government and to report directly to Congress. Based on the GAO reports, Congress meets as needed and informs taxpayers about the waste of their money.

In Korea, news reports said the officials of state-owned companies gave themselves bonuses while their companies were in a huge deficit. The GAO would not have let this go. Instead, it would have suggested a clear solution to Congress, such as closing the companies and allowing private companies to bid for them, or else changing the management. What is the use of yelling at such companies once a year when they have huge deficits every year?

The power to audit was given to the National Assembly, which represents the people, with the original intention to that it monitor every institution of the administrative branch and investigate whether or not taxes were wasted. But the audit has turned into a 20-day annual event where lawmakers behave shamefully, shaking their fingers at one another in a rage, and criticizing ministers while the heads of corporations watch.

The National Assembly should have a permanent investigative arm like the GAO. Then, there would be no need for the perfunctory 20-day audit, nor a need for fights in the National Assembly.

A permanent investigative arm would also improve the image of our lawmakers. And it would save costs by letting experts handle the inspections. It would also shorten the length of hearings. Korea needs to replace its current audit system with one based on the U.S. system, which leaves such matters to the experts.


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