[Edaily Marketin, Reporter JI YEONG-EUI ] Although the head of the National Pension Service’s Real Estate Investment Division was dismissed following a controversy over abuse of authority, questions remain regarding the management and oversight responsibilities of an organization that manages over 1,700 trillion won in the nation’s retirement funds.

Critics are asking what the internal control and monitoring systems were doing while allegations of undue influence over external asset managers and misconduct toward internal employees persisted for years.

As the Ministry of Health and Welfare and the National Pension Service prepare for a closed-door meeting to discuss responses to issues raised during the parliamentary audit and media reports, observers point out that effective measures to prevent a recurrence—rather than mere public explanations—must come first.

Is the problem the misconduct itself, or is it the public disclosure of the inner workings? Will improvement measures be discussed?

According to the investment banking (IB) industry on the 11th, the Ministry of Health and Welfare and the National Pension Service are scheduled to hold a closed-door meeting on the 16th to discuss responses to issues raised during the parliamentary audit and recent media reports.

It is the duty of the supervising ministry to review the findings of the parliamentary audit and verify the content of media reports. However, the key issue is where the focus of the meeting will lie. Observers note that the crux of the matter is whether the meeting will be limited to image-management explanations aimed at quelling negative public opinion, or whether it will rigorously examine the management and supervisory responsibilities of the organization that failed to control the problem over an extended period.

To date, the National Pension Service has placed greater emphasis on internal crackdowns—conducting multiple rounds of “training on preventing information leaks”—rather than investigating allegations of internal misconduct or improving internal controls.

Observers note that it is difficult to rule out the possibility that, even at this meeting, discussions will prioritize controlling the channels through which internal information leaks to the outside and devising strategies to respond to negative media coverage, rather than addressing substantive measures to prevent investment executives from abusing their operational authority.

This is why concerns are being raised that the NPS is focusing more on preventing problems from becoming public rather than actually addressing them.

Att

empt

s to “identify specific witnesses” even during the audit process… “Doubts” about the commitment to controlling operational authority

Although the head of the Real Estate Investment Division has been dismissed, analysts note that there are more than just one or two issues that need to be resolved. There are growing calls to strengthen practical mechanisms to distinguish between legitimate business requests from investment managers and the improper exercise of influence, and to establish effective checks and balances.

Controversies surrounding abuse of power and allegations of interference in the personnel affairs of external asset managers have persisted for years. Regarding Centerfield—a prime asset worth around 4 trillion won that the Real Estate Investment Division sought to replace—allegations of hiring favoritism and controversies over altered evaluation scores have followed in quick succession.

As of the end of August, the National Pension Service’s fund reserves totaled 1,684.4 trillion won. The National Pension Service is a “major player” that wields immense influence over investment opportunities and follow-on capital commitments for external asset managers. Critics point out that the problem has been festering for years due to the industry’s reality, where firms are reluctant to raise objections even when faced with unreasonable demands for fear of future disadvantages in business dealings.

Furthermore, it has been revealed that during this audit process, a high-ranking official in the Real Estate Investment Division even attempted to identify the victim who filed the complaint. This raises concerns about whether the identities of victims and whistleblowers can be protected even during investigations into allegations of misconduct.

It is not that the National Pension Service lacks a proper reporting system. It has systems in place for anonymous reporting through external firms and for reporting via attorney representation, and it is equipped with an Audit Office and a compliance support organization. However, this audit process has revealed certain limitations. Even when an external firm receives a report, the actual investigation is handled by the National Pension Service’s Audit Office. Critics point out that simply ensuring the security of the reporting channel is not sufficient if the reporter fears exposure of their identity or resulting disadvantages in business dealings.

Yang Seong-woo, director of the Public Interest Whistleblower Support Center at People’s Solidarity for Participatory Democracy, stated, “If there are concerns about identity exposure during the National Pension Service’s internal audit process, one can directly request an investigation, audit, or supervision from the Ministry of Health and Welfare—the competent authority—or file a report with the Anti-Corruption and Civil Rights Commission.” He added, “If there is a risk of identity exposure or secondary harm during the Audit Office’s investigation, there is also the option of requesting that the investigation itself be outsourced to an external specialized agency.”

Furthermore, it has been pointed out that the authority to make investments should not be wielded like political power; instead, there must be preemptive controls to prevent unfair demands, and when problems do arise, the organization that neglected them must be held accountable. There are also calls to strengthen monitoring by officially documenting key directives to external asset managers and independently verifying the private conflicts of interest of investment managers.

An official familiar with the National Pension Service’s affairs said, “It is not that the National Pension Service lacks management and control systems compared to global pension funds,” adding, “The National Pension Service’s ethics and human rights management plan includes disciplinary measures against superiors who conceal abuse of power or neglect the protection of victims.”

However, the source pointed out, “The issue lies in whether there is a genuine willingness to actually apply such sanctions and disciplinary measures and to improve the situation.”