Don’t let them walkThe extent of misdeed committed by major shareholders of ill-fated mutual savings banks does to cease to surprise. It is a wonder how a person like Kim Chang-kyong, the chairman of Mirae Savings Bank who was caught trying to flee to China on a boat carrying customers’ deposits, could have been an established financier running a major financial business. The question arises whether this country has a reliable financial regulatory and enforcement system to prevent financial crimes at all.
The major shareholders of the four recently suspended mutual savings banks all have criminal records for illegal lending practices. But they walked free, either on probation or paying fines. Kim was investigated by prosecutors in 2006 for taking out a new loan of 3.7 billion won ($3.2 million) and violating the law that prohibits borrowing from invested financial firms. He was fined 30 million won in the first trial and was granted a stay of an execution for the fine in the second trial in 2009. A Gwangju High Court said it considered the fact that Kim repaid his debt and endeavored to turn the bank’s business around. Kim and the prosecutor did not appeal to the Supreme Court.
The ruling helped Kim maintain his CEO position. Under the mutual savings bank and other finance-related laws, an executive is stripped of his or her position upon receiving a sentence beyond a fine. Thanks to the reprieve, Kim was able to continue his spree of illegal acts involving embezzlement and outlawed fund-raising. It shows the toll court tolerance can take on the society and economy.
The Supreme Court next month will vote on a revision of guidelines to toughen persecution against financial and securities offenses to reflect the serious damages financial crimes have on consumers and the market. But it is up to the judge to decide the final ruling. The bench must pay heed to the victims who have lost their life savings because of malpractice from greedy financiers.