Kim Rahn is the managing editor of The Korea Times. Since joining the company in 2003, she has covered various beats including the presidential office, Seoul city government, the Bank of Korea and the tourism industry. In 2014, she won the Society of Publishers in Asia (SOPA) award for her coverage of the ordeals of migrant women in Korea.
Hana Bank chief pressured to resign
.jpg?w=728)
By Kim Rahn
Kim Jong-jun Hana Bank CEO
By Kim Rahn
Financial regulators have pressured Hana Bank CEO Kim Jong-jun to step down by slapping a heavy punishment on him for his improper investment when he was heading another unit of Hana Financial Group.
Although his current term is guaranteed despite the penalty, the sanction may damage Kim’s leadership and he may leave voluntarily.
The Financial Supervisory Service (FSS) gave Kim a reprimand on Thursday after holding a disciplinary review committee meeting. The punishment was heavier than the warning that was initially expected.
“We decided on the heavier penalty as we found serious problems in Kim’s decision-making over the controversial investment,” an FSS official said.
About whether he expected Kim to resign, he said that was something the CEO will have to decide.
Another official said he would have to follow the lead of what others in similar situations have done in the past, indicating that the authorities want him to step down. Former KB Financial Group Chairman Hwang Young-key and former KB Kookmin Bank CEO Kang Chung-won resigned after receiving heavy sanctions.
Punishments by the FSS on financial company executives include cautions, warnings, reprimands, work suspensions and recommendations of dismissal. Those getting reprimands or worse are banned from working for the financial industry for up to five years after completing their existing terms.
Kim, who became the bank CEO in March 2012 for a two-year term, was reappointed in March for another year.
In 2011, when Kim was chief of Hana Capital, the company invested 14.5 billion won in troubled Mirae Savings Bank by buying its shares. But it lost 6 billion won after Mirae went bankrupt months later.
According to the FSS, Hana Capital fabricated documents about Mirae’s value and asked for ex post facto approval from the company directors for the purchase. It was alleged at that time that the company pushed ahead with the investment through improper procedures to help former Mirae Chairman Kim Chan-kyung, who was later arrested for embezzling corporate funds.
The FSS also issued a warning to then Hana Financial Chairman Kim Seung-yu for his involvement in the controversial investment.
“We concluded Kim Jong-jun could not decide on such a huge investment on his own without the then-chairman’s direction,” the official said.
If Kim resigns, many of the bank and the financial group’s projects may come to a halt or face rescheduling, including the merger of Hana Bank and the group’s other banking unit, Korea Exchange Bank.
Besides the investment case of Hana Capital, the FSS is also investigating Hana Bank staffers’ possible involvement in a fraudulent loan scandal.
Earlier this year it was found that a worker at KT ENS and heads of its subcontractors fabricated loan-application documents and borrowed 1.8 trillion won from 17 financial companies.
Hana extended the largest amount, and about 160 billion won of it has not yet been paid back.
“The bank had a problem in loan-review process as it failed to detect years of fraudulent loans involving a huge amount of money. We are inspecting the bank and the group’s internal control systems and possible collusion between bank staffers and the suspects,” the FSS official said.
“We’ll check the group and its affiliates thoroughly, and through random inspections if necessary,” he said.