The banking sector is continuing to recruit former officials from the Financial Supervisory Service (FSS) as executive auditors this year. The banks explain that former FSS officials have a high understanding of audit work, making them suitable for the role. However, there are criticisms that this is merely a practice of favoritism towards former officials. Even with high salaries for former FSS officials in executive positions, financial incidents such as embezzlement and breach of trust have not ceased, leading to discussions about their effectiveness.
According to the financial sector on the 30th, KB Kookmin Bank selected Lee Seong-jae, a former deputy director in charge of insurance at the FSS, as the final candidate for the new executive auditor on the 26th. Lee joined the Bank Supervision Agency (the predecessor of the FSS) in 1988 and has served as the head of the insurance business inspection department, the director of the insurance compliance inspection division, the director of the bank compliance inspection division, and the director of the credit finance inspection division.
Shinhan Bank also elected Kim Cheol-woong, head of the Financial Security Institute and a former deputy director of consumer rights protection at the FSS, as an executive auditor candidate at its extraordinary general meeting. Kim joined the Bank of Korea in 1991 and moved to the FSS in 2007, serving as the director general of the general banking department, the director general of the illegal financial response team, and the director general of the dispute resolution division 2, and is currently serving as the head of the Financial Security Institute.
Kim Young-ki, the executive auditor of Kookmin Bank whose term is about to expire, is also a former FSS official. Kim served as the bank’s deputy director before taking over as the executive auditor of Kookmin Bank in 2022. Shinhan Bank's Yoo Chan-woo, also an executive auditor, is another individual who has served as a deputy director at the FSS.
The situation is similar at other major banks. Hana Bank's Min Byeong-jin, Woori Bank's Yang Hyun-geun, and NongHyup Bank's Ko Il-yong are also former FSS officials. Regional banks and internet-only banks are also dominated by former FSS officials in their executive auditor positions. JB Financial Group announced on the 26th that it appointed Kim Dong-seong, a former deputy director at the FSS, as the head of its audit department (vice president). The current executive auditor of Toss Bank is Park Se-chun, a former deputy director at the FSS.
Banks unanimously state that there are no individuals better suited for auditor positions than those from the FSS. While the connection to the job cannot be overlooked, the issue is that most of these individuals are being utilized as 'lobby fronts' or 'shields' for the financial authorities. A bank official noted, "There is clearly an expectation for communication with the authorities," adding, "As next year marks the first year of the new accountability structure, an auditor who can actively communicate with the FSS is needed more than ever."
Lee Bok-hyun, the head of the FSS, also raised concerns about favoritism towards former officials, calling for the eradication of an 'interests cartel.' Lee urged employees in July to ensure there are no misunderstandings from the perspective of ordinary citizens regarding personal contacts with FSS alumni working in financial firms or in employment at financial companies. This has been interpreted as a warning against the actions of former FSS officials leveraging personal networks to meet current FSS employees and seek cooperation, which could appear cartel-like.
There are also perspectives questioning whether these auditors are performing their duties properly. Executive auditors hold overall responsibility for accounting and auditing duties, monitoring management to prevent fraud or corruption. However, with financial incidents persisting, including a recent case of improper lending involving a former Woori Financial Group chairman, criticisms have emerged that the oversight functions have become ineffective. Woori Financial has created a dedicated organization for supervising management, called the 'Ethical Management Division,' and has recruited Lee Dong-soo, a lawyer with a background in vice administration, to aid in this effort.