Faith, power and corruption

By Kim Jae-won

Somang Presbyterian Church, where President Lee Myung-bak and his wife Kim Yoon-ok attend, has established itself as a weekly gathering for some of the biggest names in the Korean financial industry over the past four years.

But with an explosive savings bank scandal threatening to blow up in the face of the administration, the unique bond built on money, faith and power is beginning to split at the seams.

To detractors of the Lee government, Somang Church, located in one of the most affluent areas in southern Seoul, has been a symbol that epitomizes the President’s elitism and cronyism, along with his alumnus Korea University and Gyeongsang Province from where he hails.

Korea Development Bank (KDB) Chairman Kang Man-soo, the President’s first choice as finance minister, and Lee Kyung-sook, former Sookmyung Women’s University president, who served as head of Lee’s presidential transitional committee also go to Somang Church.

An interesting development was the slew of financial bigwigs flocking to the church and eventually forming a private club dubbed the ``Somang Financial Society,’’ which showed that the church was much more than just a place for worship.

The problem for the President, however, is that his high-profile group of church friends includes recently-arrested Solomon Savings Bank Chairman Lim Suk, who appears to have more baggage than Incheon International Airport.

Lim, a Somang Financial Society member, is charged with embezzling around 17 billion won (about $14.5 million) of corporate funds and also accused of breach of trust after allegedly approving 150 billon won in illegal loans to massage the egos of those he needed to.

Solomon was among four secondary lenders suspended by the Financial Services Commission (FSC) earlier this month due to toxic financial health. According to financial regulators, the country’s second-largest saving bank, currently has more in measured debt than assets due to irresponsible business practices and a lending spree to a crumbling real estate market.

Lim, as well as Mirae Savings Bank Chairman Kim Chang-kyung, is also facing suspicions of bribing politicians and bureaucrats for business favors. Needless to say, Lim won’t be attending the weekly Somang Financial Society meetings for a while, and it’s unclear whether other members will be happy to continue their Sunday gatherings.

It hasn’t exactly been smooth sailing for Kang either as he was forced to abruptly step down as finance minister after ruthlessly pushing low-tax and export-oriented policies. He moved on to the management helm at KDB, but industry watchers wonder whether he still has the same clout. KDB’s bid to acquire state-owned Woori Financial, the country’s biggest banking group, fell apart last year due after failing to receive the FSC’s blessing. Kang is currently pushing for an initial public offering for KDB, but it’s unclear whether the company will manage it this year as originally planned.

KORAMCO REITs and Trust President Lee Woo-cheol is also a member of the Somang Financial Society. The bureaucrat-turned-businessman was a deputy governor of the Financial Supervisory Service in the early stage of the Lee Myung-bak administration. In the end of 2008, he moved to head the nation’s life insurance companies’ association, and worked there for three years.

After retiring from the role, Lee returned to the real estate trust company in February, but industry watchers say his current post is not that powerful compared to his former careers. KORAMCO is a mid-tier real estate company which marked 9.2 billion won in net income last year.