Supervising the FSSExpecting the financial regulator to keep scrupulous watch and ensure order in the financial sector may be like asking the fox to guard the henhouse.
A senior official of the Financial Supervisory Service is accused of collaborating with large-scale loan schemers by keeping them informed about the investigation of their case and helping them flee the country. In return, the official received a sizable piece of land, luxury trips and other graft.
According to police and the FSS, the head of the capital market investigation bureau at the financial watchdog was entertained with casino and golf expeditions and received a piece of property valued at 600 million won ($554,000) from the schemers, including an employee of KT ENS suspected of involvement in a 1.8 trillion won loan scam. KT ENS is a subsidiary of telecommunications giant KT.
When they came under surveillance, he kept them informed of developments in the investigation and helped them flee overseas. The official not only sold off regulatory information to crooks but also actively colluded with them to help them commit a crime.
Misappropriation, bribery and other forms of corruption involving FSS employees are reported almost every year. Eight incumbent and former officials were found to have received kickbacks in the investigation into the mutual savings bank breakdown in 2011.
Some of them forced financial institutions to sell insurance contracts, and an auditor last year was sentenced for taking a total of 80 million won in bribes. Each time, the FSS promised discipline and an end to corruption.
We can only suspect there may be other sneaky behind-the-scenes deals going on. Regardless, the FSS has lost credibility as a guardian of order in the financial market and as a protector of consumers.
If the FSS cannot be relied upon to clean up its own house, outside constraints may be inevitable. A new set of regulations to watch for wrongdoing by public officials of the supervisory agency is in order.
The government should also have to re-examine the organization and function of the independent agency to keep temptation and corruption at bay.
JoongAng Ilbo, March 20, Page 30