Banks to leave scandal-ridden FKI

By Nam Hyun-woo

The Federation of Korean Industries (FKI) is falling apart, as not only conglomerate members but also bank members are rushing to exit the country’s biggest business lobby group.

The FKI has been accused of forcing members to donate tens of billions of won to the Mir and K-Sports foundations at the root of a corruption scandal involving President Park Gen-hye and her confidant Choi Soon-sil.

Industrial Bank of Korea (IBK) CEO Kwon Seon-joo said Thursday, “The IBK will submit a withdrawal letter to the FKI this coming Monday,” during a National Assembly hearing.

The bank had kept a neutral stance over the issue but recently decided to leave the FKI. Observers say Samsung Electronics Vice Chairman Lee Jae-yong’s announcement of exiting the FKI affected the bank.

Following the lead of the state-run IBK, another policy lender, the Korea Development Bank (KDB), said it will also submit a withdrawal letter next week.

The Export-Import Bank of Korea said it will come up with a decision in the first half of next year.

Commercial banks are also paying keen attention to the situation. Shinhan Bank said it is considering an exit, while KB Kookmin said it is watching the situation. Standard Chartered Bank Korea, reportedly, is also reviewing a possible exit.

Meanwhile, Woori, KEB Hana and Citibank Korea said they are not considering leaving.

“Banks do not serve a leading role in the FKI,” said a banking source asking not to be named. “The FKI was a link between politics and the economy ― whether it was corruptive or cooperative ― and banks joined the FKI to do business with conglomerates. Commercial banks will likely move when more than half of conglomerates whose heads were present at the parliamentary investigation over the scandal decide to exit the FKI.”

Samsung, LG and SK have already stated that they will leave, while CJ and Hyundai Motor are yet to come up with a clear stance. The heads of Hanjin, GS, Lotte and Hanwha expressed their opposition to leaving the group.

According to sources, the FKI is currently sending letters asking its members whether they will leave or not. After collecting the letter, the FKI will hold a general meeting in February next year. With more than 600 members, observers say the lobbying group’s fate is likely to be determined then.