[EDITORIALS]A curiously vindictive penaltyLast week the Financial Supervisory Service announced that it would discipline Kim Jung-tae, the president of Kookmin Bank. The agency said the bank had committed bookkeeping errors amounting to 550 billion won ($458 million) in the process of its merger with Kookmin Card last year. The agency said it would hand Mr. Kim a “censure warning” that would keep him from being reappointed when his term ends in October. Such a measure would not be fair or procedurally wise.
First of all, the agency has yet to explain why the bank’s violation of accounting standards is a “serious offense” that deserves such a “censure warning.” The agency claims it has no choice but to heavily discipline the bank in fairness to Korea Exchange Bank, which held to accounting standards in its merger with the former Korea Credit Service. But Kookmin Bank claims it had consulted with experts and even the National Tax Service because it felt the accounting standards were vague. It is difficult to understand how a decision made after consultation with the National Tax Service could be a serious offense.
Moreover, it is reported that the Financial Supervisory Service’s deliberation committee decided to proceed with the strong disciplinary measure even after the majority of third-party accounting experts told it that Kookmin Bank’s violation could not be considered a serious offense. Also, despite the fact that Mr. Kim’s official disciplinary procedure is to start next month, the deputy governor of the Financial Supervisory Service came forward to emphasize that Mr. Kim would be strongly penalized. It cannot be denied that the financial watchdog has ignored principles and due procedure in imposing this penalty. That is why there is criticism that Mr. Kim is being punished for opposing the government’s position on dealing with LG Card Co., and that the government’s personal vendetta is dragging Kookmin Bank’s share price down.
It is not our concern how Mr. Kim’s work at Kookmin Bank will be evaluated, or what will happen to him afterwards. What is important is that the disciplining of bank presidents should be transparent and fair. Fair procedures are persuasive procedures. Nothing should be done to make the public suspect that bureaucrats are squeezing the throat of a financial firm that was restructured at great cost to the taxpaying public.
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