Lee’s aide to take over KDB

Former finance minister known as President’s tutor on economy

By Kang Seung-woo

Former finance minister Kang Man-soo, better known as President Lee Myung-bak’s tutor on the economy, will most likely be the next head of the state-run Korea Development Bank (KDB) Financial Group, a financial regulator said Thursday.

With Kang looking set to take the KDB job, the four top financial groups, KB, Woori and Hana, along with KDB would be led by those with close ties to President Lee.

However, he is expected to face a tough road ahead to reach the high-profile post due to rising opposition.

The Financial Services Commission (FSC) announced that the 65-year-old life-time bureaucrat has been nominated as chairman of KDB Financial Group.

“Kang is the right person for the job,” FSC Chairman Kim Seok-dong told reporters. “He will revitalize the KDB, since the functions have been so mismanaged that the bank as a whole has underachieved in its goals.”

The candidate for the top KDB post needs the final nod from the President and if Kang is approved, he will replace current Chairman Min Euoo-sung, whose term expires on June 10, and also lead the group’s banking unit. Kang currently serves as a special advisor to the President on economic affairs.

“I did not know that I was nominated until today,” Kang was quoted as saying “I will see what I can do in this new job.”

“As Kang has a wealth of experience and knowledge on local and global economy and finance, he is well qualified to lead KDB Financial,” the FSC said in a news release.

Kang, a native of Hapcheon, South Gyeongsang Province, earned a bachelor’s degree in law at Seoul National University in 1969 and a master’s degree in economics at New York University in 1987.

He joined the Finance Ministry in 1970 and became vice minister in 1997. When the Asian financial crisis in 1997 and 1998 exposed the nation’s banking system to be opaque and inefficient, he stepped down from his post. Then he became an advisor for President Lee. Kang, who met the President in church, worked on Lee’s presidential campaign and his win assured Kang of the post of the Strategy and Finance Minister.

According to pertinent regulations, Kang, who resigned as finance minister at the start of 2009, became eligible for a finance industry job this month, as Korean law bans former bureaucrats from seeking private-sector employment in industries influenced by their old jobs within two years of leaving their post.

While at the helm of the finance ministry, Kang received mixed reviews for his performance as finance minister. His critics mostly slammed his foreign exchange policies in the earlier part of the financial crisis that were based on weakening the won to stimulate exports, which were then blamed for spiking inflation and deteriorating the economic turmoil by crippling the buying power of local companies.

In addition, his advocacy of tax cuts still forms the mainstay of the Lee administration’s economic governing principle, which critics called a policy for the rich.

Entering this year, the nation’s leading banking groups, Woori Financial, Shinhan Financial and Hana Financial, were bracing for sweeping changes to their corporate leadership and Kang has always been seen as the favorite to a high-profile seat if he wants.

But he opted not to apply for the job at Woori or Shinhan, despite widespread speculation he would do so.

As for Hana, the nation’s fourth-largest financial holding group by assets, it could be Kang’s pick, but market observers said that he would not mount a challenge against Chairman Kim Seung-yu’s reappointment because Kim, 67, is also a close friend of President Lee, and they attended Korea University together in the early 1960s.

If Kang is selected to head KDB Financial, President Lee’s three close aides would have assumed the chairmanship of the nation’s leading financial holding firms ― Euh Yoon-dae at KB, Kim at Hana and Kang at KDB.

The labor union of KDB released a statement on the Kang appointment and called for a thorough review on him.

“The nominee is a former government official and his leadership in a financial institution has not been vindicated yet,” the union said.

“If Kang avoids the review or it is not satisfactory, we will move against his appointment.”

Lawmaker Park Sun-young of the Liberty Forward Party said, “Selecting Kang to the chairmanship of KDB Financial is the climax of President Lee’s arrogant personnel shift.”

Some say that that stalling privatization of the group is expected to pick up speed thanks to Kang.

The government has a plan to transfer KDB Financial, which is 100 percent under the state-run Korea Finance Corp. (KoFC), into private hands by 2014, as President Lee vowed to boost competitiveness.