January 19, 2019

Authorities to expand recruitment probe to nonbank financial institutes

PUBLISHED : February 06, 2018 - 17:11

UPDATED : February 06, 2018 - 17:11

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[THE INVESTOR] As part of an ongoing campaign to eradicate recruitment irregularities from the financial circle, the authorities are now seeking to expand their investigation into nonbank financial institutions.

Concerns have been raised, however, that excessive control over private financial units may be taken as an infringement of business autonomy, which the incumbent government has often been blamed for.

The Financial Supervisory Service is currently discussing with the Financial Services Commission on kicking off an extensive probe on some 70 savings banks, insurers, credit card service providers and investment companies this month, officials said on Feb. 6.

The Seoul Southern District Prosecutors’ Office on Feb. 6 searched the headquarters of KB Kookmin Bank in Yeouido over allegations that the bank had offered special favors to family members of its group Chairman Yoon Jong-kyoo and other designated job candidates.

Earlier last week, the FSS announced its findings on suspected cases of recruitment irregularities at five local banks, including KB Kookmin Bank and KEB Hana Bank, and handed the cases over to the prosecution.

The watchdog’s gesture to expand the probe to nonbank institutions reflected the government’s drive to eliminate corruption from the financial circle.

“The banks’ recruitment scandals are representative examples of accumulated evil practices in our society. … I doubt that such irregularities existed in banks only,” said Prime Minister Lee Nak-yon in a Cabinet meeting late last month, urging the FSC to tighten its grip on the industry.

However, unlike banks, nonbank institutions are often operated under an owner management system, where executive members are at the same time major shareholders.

“In the case of banks, the operating chief may be charged with business obstruction towards the management and breach of trust towards the shareholders,” said an official of the FSS.

“But under a system in which the owner is also the top shareholder, such charges may not be applied.”

By Bae Hyun-jung/The Korea Herald (

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