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| Financial Services Commission Chairman Eun Sung-soo, right, listens as Financial Supervisory Service (FSS) Governor Yoon Suk-heun speaks during an audit of the FSC and the FSS at the National Policy Committee at the National Assembly on Yeouido, Seoul, Friday. |
By Lee Kyung-min
The country's top financial supervisor and regulator called for a greater scrutiny of financial group heads whose "limitless power" has resulted in a slew of corrupt business practices including hiring fraud.
Financial Services Commission Chairman Eun Sung-soo and Financial Supervisory Service (FSS) Governor Yoon Suk-heun expressed the view that the much-needed scrutiny will work best if taken on by shareholders and the public, adding that it was a more desirable method of keeping the heads of financial firms in check than an outright government intervention which often ends up undermining corporate autonomy.
KB Financial Group Chairman Yoon Jong-kyoo clinched a third term, despite a hiring fraud allegation involving his granddaughter when he was KB Kookmin Bank CEO.
Similarly, Shinhan Financial Group Chairman Cho Yong-byoung and Woori Financial Group Chairman Son Tae-seung managed to secure second terms in March,
For Cho, the extension came only about two months after he was handed down a suspended prison term for exerting influence to hire applicants who were related to his acquaintances. Son's term was extended despite the recent fiasco involving derivative-linked funds (DLFs).
The FSC chairman and FSS Governor said they were concerned about financial group heads seeking term extensions without there being rigorous oversight, a highly problematic years-long practice that shows little improvement despite repeated criticism.
"We are aware of the problems, and so are the heads," Eun said during an audit of the FSC and the FSS at the National Policy Committee at the National Assembly on Yeouido, Seoul, Friday.
"I have had my concerns delivered to group heads and bank CEOs, although I do not intervene in a direct manner. Continued communication is needed, together with constant concerned voices raised through civic groups," Eun said.
The acknowledgement followed a criticism of financial group leaders who an opposition lawmaker said were subject to no accountability for their actions, precisely because of a lack of punishment due to the inaction of financial authorities.
Rep. Kang Min-kuk of the main opposition People Power Party said Son emerged from the DLF fiasco unscathed, an unacceptable outcome since many buyers of the financial product known for its highly complicated and complex structure lost a substantial part of their investment or in some cases their entire investment. Those affected included many senior citizens who put up their retirement savings.
The FSS initially recommended to the FSC that Woori Bank be suspended for six months, with a fine of 22.1 billion won ($19 million).
But the FSC reduced the fine to 19 billion won, essentially helping Son whose move seeking a second term was made easier due to the lighter punishment.
"Large-scale fiascos such as mis-selling of derivatives in the financial industry continued to occur due to the authorities' negligent oversight of the corrupt market players. The financial authorities have no measures to put a stop to this," he said.
Excessive government intervention should be avoided given the clear drawbacks observed in the past, Eun noted.
"A revision to the current shareholding loop seeking to limit the group heads' power is pending at the National Assembly awaiting your review. Criticism will help them become more conscious about their behaviors."
Yun echoed the sentiment, adding their power is far to greater compared to their responsibilities.
"Financial group heads should not sit on the group executive committees and their moves seeking term extensions should be more heavily scrutinized," Yun said.
Allegations against KB Financial Group Chairman Yoon was cleared in 2018.
