First US Chief of NPS demands high ethics

By Cho Jin-seo

Oh Young-soo (Erika Oh) says that conscience pushed her to join the National Pension Service even though she earns much less there than in the private sector.

The first U.S. chief of the public pension fund will be dispatched to New York in June when its midtown Manhattan office is due to open. It will be the first overseas branch of the 300-trillion-won ($270 billion) fund.

She hits the same note with NPS chairman Jun Kwang-woo in advocating that the fund is not merely a profit-oriented organization and should care for the whole of Korea’s welfare as well as social justice.

“When I joined the NPS in 2003, my salary was probably cut by more than a half,” the 43-year-old said last week in her temporary office in southern Seoul. “But I wanted to work in a place where people do something good for ordinary people.”

This is because she had seen the good and bad side of capitalism. She used to work at the Korea Exchange Bank’s investment banking and corporate lending division in the 1990s. When the Asian financial crisis hit many Korean companies and forced them into restructuring and massive layoffs, Oh often accompanied foreign investors and auditors who want to take a look at factories before buying them at cheap prices.

The experience taught her good lessons on valuing companies and stocks. But it also reminded her of the cruel side of her job.

On one day, during a routine due-diligence tour at one big Korean factory, which was soon to be acquired by a Western firm, she noticed there was a group of workers on a corner of the assembly line, who looked young and innocent.

The factory was full of expensive, newly purchased machinery. But by the nature of corporate M&A and restructuring, it was obvious that the first ones out would be the workers, not the machines.

“It was too harsh for these young workers that they landed their first job out of high school, just to face this layoff so quickly. That was not right,” she said. “This may sound like a socialist idea but that was how I felt.”

Oh says that the NPS will keep a high ethics code not only for itself but also its partners. For example, the fund last week has stopped paying Deutsche Bank for managing a part of its portfolio, as the German bank was found to be involved in trading fraud last November in Seoul, which caused a major drop of the KOSPI index.

The decision to kick out Deutsche was made at the fund's investment board. That is the common sense for everyone at the NPS that they cannot work with a firm with such bad reputation, Oh says.

Coming to the NPS after a brief spell at Samjong KPMG, an accounting firm, Oh has played a major role in setting up the fund’s investment plans in overseas equities. The portion of foreign equity grew to 21 trillion won ($18.7 billion) as of the end of last year from virtually nothing.

Graduated from University of Massachusettes Amherst and with perfect English skills, she is also the highest-ranking female employee in the NPS’s fund management division.

The Manhattan office ― the exact location of which is still under discussion ― will be used as the NPS’s research and networking hub for Wall Street. There will be five Korean employees and Oh is looking to hire one local.

The fund has investment partnerships with a number of institutions there including Kohlberg Kravis & Roberts, a private equity fund. It also hires foreign and domestic fund management firms to manage about 30 percent of its money. The whole NPS fund is expected to more than triple in size by 2020.