By Kim Jae-kyoung
Financial Services Commission Chairman Chin Dong-soo made it clear Monday that the government will hold Shinhan Financial Chairman Ra Eung-chan accountable for his alleged violation of the real name transaction law.
Chin confirmed that Ra used several bank accounts opened in other people’s names and indicated that 42 Shinhan executives and employees are subject to disciplinary measures. Ra has been under investigation for allegedly wiring 5 billion won ($4.45 million) to now-jailed businessman Park Yeon-cha in April 2007 under borrowed names.
“We are continuing our inspection of Shinhan and will discuss who should be held accountable for the matter at an appropriate time,” Chin told lawmakers during a National Assembly inspection Monday.
Chin’s remarks came a few hours after Ra made a surprise appearance before the media Monday to give an explanation for the financial regulator’s decision. At a meeting with reporters, the chairman admitted to holding such accounts under borrowed names but denied having broken the real-name financial transaction law.
Asked why he used borrowed names, Ra said, “Without me knowing anything about it, the old practice, which took place in the past (before the real name law took effect), just habitually continued.”
He ruled out the possibility of Shinhan’s big three stepping down at the same time, hinting that he has no intention to quit of his own acoord. “I hope that Shinhan will not fall into a leadership vacuum. Somebody should clean this mess up to stabilize the organization,” he said.
Ra’s unusual appearance to the public came after the FSC informed Shinhan of its decision to hand down heavy disciplinary actions against its chairman — dismissal, suspension from duty or a disciplinary warning, any of which will ban Ra from taking an executive post at a financial company for three to five years.
The nation’s tax authority is also pressing Ra. It said that it is considering an investigation against Ra for alleged tax evasion of income on interest which came from the borrowed-name bank accounts.
Given Shinhan’s big three — Ra, CEO Shin Sang-hoon and Shinhan Bank CEO Lee Baek-soon — all being entangled in legal disputes, chances are that Ra’s punishment and internal feuding will combine to lead to a group management reshuffle earlier than expected.
The most feasible scenario is that Shinhan will soon appoint one of its former or current executives as an acting chairman to fill a possible management vacuum because the group can lose the initiative to the government if it delays announcing an appointment while Ra is unable to attend to his duties.
Internally, Lee In-ho, the group’s former CEO, Lee Jae-woo, CEO of Shinhan Card, and Wi Sung-ho, deputy president of the group, are considered leading candidates for the acting chairman position to replace Ra.
There is still a chance that the government will parachute a bureaucrat or place an outsider to the top post of Shihan on the pretext of fixing the local bank’s governance structure. Among the outsiders, Kim Pyung-joo, a professor emeritus at Sogang University, former vice finance minister Kim Seok-dong and former KAMCO chairman Lee Chul-hwi are on the list.