Ex-Shinhan boss punished for illegal bank accounts

By Kang Seung-woo

The Financial Supervisory Service (FSS) took heavy punitive measure against former Shinhan Financial Group Chairman Ra Eung-chan Thursday for violating the Real-Name Financial Transaction Law, which will ban him from taking executives posts at any financial firms for the next four years.

In addition, 26 other group officials and employees linked with Ra’s irregular financial transactions were also punished. The FSS handed down an institutional disciplinary warning to Shinhan Bank, the group’s flagship unit.

However, Shinhan President and CEO Shin Sang-hoon, who has been suspended from duty for his alleged involvement in illegal lending and embezzlement, was not punished as the FSS found he was not involved in Ra’s irregular actions.

“The FSS made the decision, holding Ra accountable for the violation of the Real-Name Financial Transaction Law,” FSS spokesman Kim Gwang-sig said in a briefing.

The penalty will be made final by the Financial Services Commission (FSC), the decision-making body of the FSS, on Nov. 17.

Ra has been under investigation by the nation’s financial watchdog over allegation that he opened bank accounts under “borrowed” names and transferred 5 billion won to Park Yeon-cha, a Busan-based businessman and a confidant of the late former President Roh Moo-hyun, through the accounts in 2007.

The stern action came a week after the head of the nation’s third largest financial group stepped down from the top post Saturday, ending his 50-year banking career in disgrace. But he still maintains his spot on the board of directors.

With the punishment, Ra is expected to be under pressure to step down from the board. Shinhan has been headed by acting Chairman Ryoo Shee-yul, since Ra’s resignation.

The directors are selected at the general shareholder’s meeting, so he can retain the post unless he quits.

But the financial industry expects that he is likely to voluntarily step down.

Korean-Japanese outside directors are expected to force Ra to withdraw from the position at a special committee meeting, scheduled for Tuesday.

For Shin, the FSS said that it is hard to judge he had something to do with the illegal transactions due to his short spell at the related department.