This is the first in a three-part series highlighting how Financial Supervisory Service retirees predominantly occupy chief auditors' jobs at domestic financial companies such as banks, insurers and brokerages. ― ED.
By Kim Tae-gyu
Staff Reporter
Those with the career goal of becoming a chief auditor at a Korean bank might be best advised to work for either the Financial Supervisory Service (FSS) or the Board of Audit and Inspection (BAI) first.
Among 13 commercial banks, eight employ FSS retirees as their standing auditors ― Hana, Shinhan, Kookmin, Citibank, SC First, Daegu, Busan and Jeonbuk.
SC First has gone one step further: It employees Oh Kap-soo, the former senior deputy governor of the country's financial regulator in the early 2000s, as its vice chairman.
The top in-house inspectors of both Woori Bank and Kyongnam Bank came from the BAI as well as the state-run Korea Development Bank and Industrial Bank of Korea.
HSBC Korea, a branch of U.K.-based Hong Kong and Shanghai Banking Corp., hired former FSS official Chung Sang-duck as its standing auditor in 2006.
The BAI is a government agency taking charge of public audits while the FSS is a quasi-governmental organization that monitors the country's financial organizations.
Critics claim that the banks try to exploit the bureaucrat-turned-auditors' human networks to lobby the iron-fisted FSS and the BAI when things go astray.
``What do you think banks would expect from auditors who came from the FSS? In my view, their utility is to provide something like insurance that shields banks from auditors,'' said Prof. Kim Sang-jo at Hansung University.
``From the perspective of FSS retirees, the auditors in financial companies are post-retirement programs of the FSS. It's a win-win solution for them. That's why the financial organizations fill the well-paying jobs with FSS retirees,'' he said.
A chief auditor's annual remuneration is estimated at more than 500 million won at major lenders and around 300 million won at smaller institutions.
Kim added that the practices are in the way of the development of the country's financial industry.
Responding, an FSS insider defended the lenders' propensity to hire former officials as their auditors.
``Banks cannot promote their employees to an auditor's post. They are not allowed to put one of their shareholders in the post either. In other words, there are heavy restrictions on eligibility for the post,'' the insider said.
``In this climate, FSS retirees are arguably one of the best fits for the work because they are experts as far as audits and inspections are concerned. I do not see anything wrong,'' he said.