Lee Jae-myung's longtime friend, Lee Chan-jin, the new head of the Financial Supervisory Service (FSS), took office on the 14th, spreading tension among FSS employees. With the appointment of a significant FSS head, a reorganization of the work system is imminent, and a comprehensive review of the working methods under former head Lee Bok-hyun is also expected.
Former head Lee, who was close to former President Yoon Suk-yeol, faced criticism for politicizing the FSS during his tenure while taking a hard stance against the then-opposition Democratic Party of Korea.
A notable case is the stock price manipulation incident involving Kim Keon-hee. During his tenure, Lee maintained a consistent stance that the allegations of stock price manipulation against Deutsch Motors and SAMBU Construction were 'unrelated to Mrs. Kim.'
Regarding the allegations of stock price manipulation involving Deutsch Motors, he repeatedly noted, 'The last government (the Moon Jae-in administration) conducted investigations for a long time. If there had been evidence, charges would have been filed, but we couldn't (due to lack of evidence).'
After a seven-month investigation into the allegations of stock price manipulation against SAMBU Construction, it was concluded that there were no links to Mrs. Kim. Within the FSS, there were remarks that 'there was a tendency for former head Lee to expedite the investigation in order to hand it over to prosecutors during his term.'
Recently, the special prosecutor requested an arrest warrant for Mrs. Kim, specifying the allegations of stock price manipulation against Deutsch Motors. Legal analysts speculate that the special prosecutor has secured solid evidence of the stock manipulation at Deutsch Motors. The special prosecutor is also focusing their investigation on finding links between Mrs. Kim and the stock price manipulation case involving SAMBU Construction.
During his tenure, former head Lee faced backlash after Democratic Party of Korea lawmaker Kim Sang-hee raised suspicions that she received preferential treatment in the Lime Fund redemption conditions related to the fund redemption crisis. Although the financial authorities held a review for sanctions against Mirae Asset Securities, which sold funds to her, it concluded that they could not impose sanctions, intensifying the controversy. At that time, criticism intensified within the FSS that former head Lee was politicizing the FSS.
Former head Lee also had several heated debates with President Lee regarding the amendment of commercial law, win-win finance, and the introduction of windfall taxes.
The legality of the frequent interim announcements during financial institution inspections that occurred during former head Lee's term was also brought to light. The Board of Audit and Inspection has been meticulously reviewing the list of interim announcements from the FSS's three years of inspections since April. It is reported that they will soon begin a comprehensive audit of the FSS based on this.
The Board of Audit and Inspection believes that the FSS's interim announcements of inspections may violate 'confidentiality obligations.' The Financial Services Commission Act stipulates that information learned in the course of duty cannot be leaked or used. In this regard, the FSS has made it a principle not to disclose ongoing issues regarding inspection results.
After former head Lee took office, there were numerous cases of interim announcements regarding violations deemed serious. Typically, during FSS inspections, confirmed issues are examined for potential legal violations, and after receiving interpretations from the Financial Services Commission, sanctions are imposed for violations. In this process, the FSS's judgments are often overturned.
Regarding the legality of interim announcements of inspection results, the FSS cites reasons such as the preventive effect against similar financial incidents, but there is considerable opposition within the FSS as well. A former FSS executive remarked, 'Financial incidents identified by the FSS are all issues that occurred in the past, and since the issues raised during the inspection process have been addressed through the internal control procedures of financial institutions, the preventive effect is not significant.'
Within the FSS, current employees are concerned that they may face disciplinary actions or disadvantages as a result of issues from former head Lee's tenure. Another FSS official noted, 'Dissatisfaction among FSS employees regarding former head Lee remains. There have already been several assertions that once former head Lee's term ends and he leaves, the remaining staff will ultimately bear the consequences,' adding, 'There may also be internal whistleblowing regarding the legality of the working methods as well as personnel authority issues.'