Shinhan cleared of leadership vacuum risk

Shinhan Financial Group Chairman Cho Yong-byoung answers questions from reporters at the Seoul Eastern District Court, Wednesday, after being sentenced to a half year in prison suspended for two years for his alleged cronyism. / Yonhap

By Park Jae-hyuk

Shinhan Financial Group has been able to avoid facing a leadership vacuum as the court handed down a suspended jail term to Chairman Cho Yong-byoung, Wednesday, following proven allegations of cronyism.

Having been cleared of management risk and uncertainties about its governance structure, the banking group is expected to speed up efforts to expand its presence in the financial markets here and overseas.

The Seoul Eastern District Court sentenced Cho to six months in prison suspended for two years.

He was indicted without detention in October 2018 on charges of manipulating the scores of 101 applicants to ensure the hiring of those with ties to influential politicians, the children of executives and more male workers, when he was serving as the Shinhan Bank CEO between 2015 and 2016.

In December 2019, the prosecutors sought a three year prison sentence for the chairman with a 5 million won ($4,300) in fine.

“Even if the accused did not order the personnel department to hire the underqualified applicants, it can be seen as improper enough if the CEO informed the personnel department of the fact that particular applicants had applied for the jobs,” the court said.

The chairman, however, was acquitted of his alleged violation of the Equal Employment Opportunity Act.

The court said the evidence presented by the prosecutors could not prove that the bank discriminated against female applicants in its hiring process.

Shinhan Bank was also acquitted of the charge.

The bank was indicted along with the chairman according to the “joint penal provision” in the Equal Employment Opportunity Act, which allows punishment against both the offender and the corporate body the offender belongs to.

Cho said he will appeal to the court above to prove his complete innocence.

He also apologized to his colleagues who stood on trial along with him.

“I will try to be impartially judged by the law through an appeal,” he told reporters after the sentence.

As it will take a long time until the higher courts make their judgments, the chairman will likely serve his second three-year term until 2023 without much difficulty.

Shinhan decided last month to put him forward as the sole candidate for the group's next chairman, and the reappointment of the incumbent chief will be subject to a general meeting of shareholders in March.

If the shareholders agree with his reappointment, Cho will try to solidify the financial group's status as the nation's leading banking group and will pursue aggressive M&As here and overseas, according to Shinhan.