The government is seeking to reform the outside director system as criticism continues that outside directors have only acted as a rubber stamp, failing to serve their purpose of keeping corporate management in check.

The Justice Ministry is in particular striving to find with ways to prevent outside directors from playing a “lobbyist” role and enhance their independence and professionalism.

Critics have long pointed out that outsiders, many of whom formerly worked as high-level officials at the government or public organizations, have been appointed to work as lobbyists between their firms and government officials.

“There have been discussions on the problems of the system and how to address them. They are aimed at preventing former powerful figures without any professionalism from becoming outside directors for lobbying purposes,” a ministry official told the Yonhap news agency.

“Concrete measures have yet to come out. When they are finalized, we will unveil them to the press.”

The outside director system was first introduced in Korea in 1998 during the Asian economic crisis with the aim of checking business owners and management. But the directors from outside have been under fire for failing to serve their intended role of a “corporate watchdog.”

Experts have stressed the need to strengthen the requirements for becoming outside directors and improve transparency in the decision-making process of the committee to recommend the directors from outside.

Critics noted that the management has held sway over the recommendation committee to hamper efforts to pick “neutral” directors.

“The outside directors should be capable of keeping the management in check. But the percentage of their approving of the management’s decisions has turned out to be almost 100 percent,” Chung Sun-sup, head of Chaebol.com, a conglomerate research firm, told The Korea Herald.

“The chief of the recommendation committee is also the head of the company or appointed by the head. Thus, the outside director system has been only nominal.”

Chung, however, noted that too much power among outside directors could impede firms’ business activities.

“Too much power on the directors could slow the speed of the firms’ business activities. And also, outside directors should not turn into an uncontrollable power group. We should give them authority and have them take responsibility for their action as well,” he said.

The Justice Ministry has run a special committee to discuss the revision of the commercial law since last year. The committee is expected to deal with reform measures for the outside director system.

By Song Sang-ho (sshluck@heraldcorp.com)