Controversy arises over lax punishment of FSS employee

A person walks past the entrance of the Financial Supervisory Service on Yeouido in Seoul in this file photo. / Yonhap

By Kim Bo-eun

The Financial Supervisory Service (FSS) has come under fire for lax punishment of an employee embroiled in a massive scandal involving Lime Asset Management.

An employee of the agency's division inspecting investment firms was punished by salary cut earlier this month, for handing over documents containing plans to inspect Lime Asset Management at a hostess bar last year, according to the FSS.

The supervisory authority faces criticism given the employee only got a three-month cut in monthly salary, whereas the CEOs of financial firms that distributed Lime's funds have been notified of sanctions that will bar them from serving positions in the financial sector.

The FSS employee was called to a hostess bar by a former senior FSS official who had been dispatched to Cheong Wa Dae. The employee handed the documents to the man, who then provided them to Kim Bong-hyun, a key suspect in the Lime scandal. Kim and the former Cheong Wa Dae-dispatched official are known to be long-time friends from the same hometown.

Kim is reported to have paid 6.5 million won in expenses connected to the former Cheong Wa Dae-dispatched official and the lower-level employee, on Aug. 21 last year.

The former Cheong Wa Dae-dispatched official is currently on trial for multiple allegations. A lower court sentenced the official to four years in jail and a 50 million won fine last month.

Regarding the matter, an FSS official who heads the agency's division in charge of disciplinary measures for employees said, "The level of punishment was determined on internal guidelines, taking into consideration the extent of the wrongdoing."

"The FSS often receives work-related document requests from Cheong Wa Dae, and the employee is seen to have thought the documents were provided for official purposes. In addition, the employee had been subject to orders by a superior, not only of the same institution but who had been dispatched to Cheong Wa Dae, a superior authority to the FSS,” the official said.

“Yet, considering the location the documents were handed over and the fact that the employee provided the documents without internal approval, the FSS determined the level of punishment for the employee.”

The disciplinary action for the employee was taken on Oct. 16. The FSS dismissed the Cheong Wa Dae-dispatched official.

The FSS has four types of disciplinary measures: dismissal, suspension, salary cut and reprimand. An employee may face up to a one-year delay in promotion.

Meanwhile, the FSS will hold a sanctions review committee meeting on Thursday to determine the level of punishments for the former and incumbent chiefs of brokerages that distributed Lime's funds.

The FSS has determined that CEOs need to be punished in addition to institutional sanctions on the brokerages. The level of sanctions that the agency intends to impose on the CEOs is known to be weighty, which would block them from serving positions in the financial sector for up to five years.

The conclusion at the committee meeting this week needs to be forwarded to the Financial Services Commission before being finalized.