Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
Lawmakers want chairmen of financial firms held accountable over misconduct
CEOs from the country's top banks appear at an audit as witnesses in the National Assembly, Seoul, in this October 2022 file photo. From left, then Shinhan Bank CEO Jin Ok-dong, KB Kookmin Bank CEO Lee Jae-keun, then NH Nonghyup Bank Deputy CEO Lim Dong-soon, and then Hana Bank CEO Park Sung-ho. Korea Times photo by Oh Dae-keun
By Lee Yeon-woo
Tensions are mounting in the financial industry amid speculation that the National Assembly may summon the chairmen of financial holding groups during the upcoming national audit. This year, the industry has faced criticism over its lack of internal controls ― which have led to significant cases of embezzlement by employees ― unfair trading and a surge in household debts.
According to sources in the financial industry, the National Assembly is expected to finalize the list of witnesses by Wednesday, following the Chuseok holiday.
"Various parties are currently in discussions regarding witness selection. Given the numerous financial challenges this year, there's a growing sentiment that summoning the chairmen of the financial holding groups is necessary," a source said.
The National Police Committee of the assembly will begin its financial audit on Oct. 11, targeting the Financial Services Commission. The Financial Supervisory Service will be under review on Oct. 17, followed by public financial firms such as the Industrial Bank of Korea, Korea Deposit Insurance Corp. and Korea Housing Finance Corp. on Oct. 24. A general inspection of any overlooked issues will take place on Oct. 27.
This year's emphasis is anticipated to be on the shortcomings in internal controls, given the series of significant financial blunders.
Last month, an employee from BNK Kyongnam Bank was found to have embezzled 298.8 billion won ($219 million) while working in the real estate project financing department from 2009 to July 2022. Additionally, employees from KB Kookmin Bank allegedly profited 12 billion won using insider information, and staff from DGB Daegu Bank were found to have opened over 1,000 client accounts without consent.
Even though CEOs of all five commercial banks attended last year's audit and pledged measures to prevent internal control mishaps, the recurrence of such financial incidents this year suggests they're set to face intense scrutiny and criticism again during the upcoming audit.
On the other hand, the likelihood of chairmen from five financial groups making appearances seems low. They are scheduled to attend the 2023 Annual Meetings of the International Monetary Fund and the World Bank Group, which will take place from Oct. 9 to 15 in Morocco. After these meetings, they have activities to attend to individually, such as hosting investor relations events.
The chairman of BNK Financial Group is planning a visit to Vietnam starting from Oct. 15.
Regarding the allegations that overseas engagements are intentionally scheduled to overlap with the audit, the financial sector has asserted that the meetings attended by the chairmen are pre-arranged and the overlaps are unintentional.
However, given the myriad of issues in the financial sector, some argue that the chairmen should participate in the comprehensive national audit, if called as witnesses, especially when there are no scheduling conflicts.