The controversy surrounding the slow reporting allegations of unfair lending by Woori Bank's management has come to an end. Former Financial Supervisory Service (FSS) Commissioner Lee Bok-hyun publicly emphasized the illegality of the delayed reporting, but the prosecution concluded that there was no suspicion. There are expectations that this incident could be the starting point for a backlash against the FSS.
The Southern District Prosecutors' Office of Seoul recently dismissed allegations against former Woori Bank CEO Jo Byeong-kyu for violations of the Act on the Aggravated Punishment of Specific Economic Crimes. The allegations against Jo were that he failed to report to the investigative authorities despite being aware of the unfair lending case involving about 700 billion won linked to the former chairman of Woori Financial Group, Son Tae-seung, which made headlines last year.
Before the prosecution's investigation began, there was an early attack on Jo by the FSS. In August of last year, the FSS directly mentioned Woori Bank's management in a press release stating that 'post-response procedures, such as failing to report financial accidents, were not carried out.' Subsequently, during an FSS executive meeting, former Commissioner Lee pointed out Woori Bank management's slow reporting, stating, 'Given the behavior of Woori Financial, it is difficult to trust anymore.' At that time, the FSS was in the midst of an ongoing inspection of Woori Bank.
However, the prosecution's final decision came out as no suspicion. The FSS has caught an innocent person. Responses within the financial sector largely reflect the sentiment that 'this was expected.' Although the FSS can investigate the illegalities against Jo, they are evaluated as having been premature in their announcement. An insider in the financial sector noted, 'In the past, there have been many cases where the FSS's judgment differed from those of the prosecution, police, or judiciary, but there was no major controversy,' adding, 'The problem with this case is that the FSS's interim announcement portrayed Jo as a criminal.'
The FSS's interim announcement is not just a simple controversy. There is also room to dispute its legality. The Financial Supervisory Service Act, which is the basis for the establishment of the FSS, includes a confidentiality obligation clause stating, 'FSS employees shall not disclose information learned in the course of their duties to others.' The FSS itself emphasizes confidentiality on its website, stating, 'For financial companies where inspection result measures are in progress, disclosure will not take place.' It has been reported that the Board of Audit and Inspection has begun an investigation into the breach of confidentiality regarding the FSS's interim announcement.
The FSS is neither an institution with compulsory investigative authority like the prosecution and police, nor a judging body for crimes like the courts. While it can discover illegal activities during inspections, it cannot independently determine the suspicion. In the past, the FSS also refrained from making interim announcements considering these institutional characteristics. This is because it could lead to the public believing that the facts of the crime, like in the case of former CEO Jo, have been confirmed.
Lee, the source of the controversy, has left the FSS. Opinions are emerging that the new FSS commissioner should not follow the practice of interim announcements. A former FSS advisory member stated, 'The unprecedented style of interim announcements by former Commissioner Lee has provoked controversy,' adding, 'The FSS should focus on its duties as a subordinate organization of the Financial Services Commission, rather than hastily rallying public opinion as in the past.'