Financial regulator nominee embroiled in controversies ahead of confirmation hearing

Lee Eog-weon, President Lee Jae Myung's nominee to head the Financial Services Commission, answers reporter questions at the Korea Deposit Insurance Corp. headquarters in Seoul, Aug. 14, while preparing for his confirmation hearing. Yonhap

Lee Eog-weon, the nominee for chairman of the Financial Services Commission (FSC), is facing a series of qualification controversies ahead of his confirmation hearing, including earning billions of won from multiple corporate board memberships after retiring as vice minister of economy and finance, according to opposition lawmakers Friday.

Other issues include his failure to pay income and local taxes on time and reaping huge gains from a redevelopment investment.

Lee, who previously served as the first vice finance minister, was nominated on Aug. 13 as the first chairman of the country’s top financial regulator under the Lee Jae Myung administration, with his confirmation hearing scheduled for Tuesday.

Rep. Choo Kyung-ho of the main opposition People Power Party (PPP) revealed that the nominee failed to meet the deadline for paying his 2020 income and local taxes, only making the payments after being nominated as FSC chief.

Records obtained by Choo showed that Lee settled 760,140 won ($547) in income tax and 81,440 won in local income tax on Aug. 17, four days after his nomination, although the payments were originally due in May 2021.

“He was the vice finance minister responsible for tax policy at the time, yet neglected his own taxes until just ahead of the confirmation hearing,” Choo said.

According to Rep. Kang Min-kuk of the PPP, meanwhile, the nominee earned more than 600 million won over a three-year period from May 2022 to July this year by holding overlapping positions at six different organizations after retiring as vice finance minister. His earnings came not only from outside director roles but also from consulting, lectures and advisory fees.

In October 2022, just five months after leaving his post as vice minister, Lee joined e-broadcasting, operator of Sampro TV, one of Korea’s most influential finance YouTube channels, as an outside director, a role he held until February last year.

At the time, the company was preparing for a Kosdaq listing, and his appointment attracted attention in the securities industry due to the potential influence of a former high-ranking finance official.

Although the initial public offering (IPO) was later scrapped after failing to gain approval, Rep. Kang alleged that Lee may have played a role in the company’s IPO push, given his personal ties to the company’s executives, with whom he attended high school.

Afterwards, Lee joined lifestyle brand LF as an outside director in March 2023 and began serving in the same role at CJ Logistics a year later. He stepped down from both posts after being nominated as FSC chairman.

The practice of retired government officials securing lucrative jobs at related institutions or companies and acting as de facto lobbyists using their connections and experience has long been criticized.

A revision toughening the Commercial Act is passed during a plenary session of the National Assembly in Seoul, Aug. 25. Yonhap

The president, who took office on June 4, and the ruling Democratic Party of Korea have made corporate oversight a priority, revising the Commercial Act under the “KOSPI 5000” initiative to rebrand outside directors as independent directors and strengthen their ratio requirements.

Questions are being raised about whether the FSC nominee is fit to spearhead the administration’s financial policy agenda in light of its focus on reform.

The nominee’s nearly 4 billion won gain from an apartment in a redevelopment area is also expected to be a key topic at his confirmation hearing.

Rep. Kim Jae-sub of the PPP reported that Lee bought a 58-square-meter apartment in Seoul’s Gangnam District in July 2013 for 850 million won, just before redevelopment. The apartment is now valued at around 5 billion won.

At the time of the purchase, Lee was head of the general policy division at the finance ministry and served on the presidential transition committee for the Park Geun-hye administration.

Shortly after purchasing the apartment, he was posted to Korea’s mission in Geneva for three years. Upon returning in July 2016, he rented a property in Gyeonggi Province, rather than moving into the Gangnam apartment.

Redevelopment of the area progressed in April 2018, and in 2020, Lee paid 160 million won in reconstruction fees to receive a 125-square-meter unit, where he now resides.

“When Lee bought the Gangnam apartment, he was a senior official overseeing economic policy at the finance ministry and the presidential transition committee. Considering he was about to go on an overseas assignment, the purchase raises understandable public concern that it may have been speculative,” Kim said.