Battles at NPS cost two top jobsThe National Pension Service (NPS), the state-run pension fund and the country’s biggest investor, is seeking a new chairman and a chief investment director after a power struggle.
The fund, which handles about 500 trillion won ($439 billion) in investments, announced Wednesday that its Chief Investment Officer (CIO) Hong Wan-sun ended his term Tuesday and will be replaced. Hong will stay in the post until his successor is appointed.
His term ended a week after former Chairman Choi Kwang stepped down after conflicts with the Ministry of Health and Welfare over whether to remove Hong from his post or renew his term.
The fund started receiving applications for the CIO post Thursday. It will continue accepting them through Nov. 16.
For a new chairman, a recommendation body to select candidates has been formed.
“Through the recommendation body, the Health Minister will select a candidate for the new NPS chairman and the president will approve it,” said an official from the NPS by phone. “The CIO will also be decided through another recommendation organization and approved by the Health Minister.”
Conflict between the former chairman and the Health Ministry started on Oct. 12 when he formally refused to renew Hong’s two-year term by one more year.
The Health Ministry wanted Hong to keep the position and said Choi made a unilateral decision on Hong’s fate without agreement from the ministry. It demanded Choi step down for abusing his power.
The main issue behind the power struggle is the ministry’s controversial plan to separate the organization’s Fund Investment Office, an inner-circle at the fund in charge of investing and managing the 500 trillion won of public pensions.
Its head is the CIO and he, as the country’s biggest fund manager, is nicknamed “president of the capital market” in Korea. The annual salary of the CIO is known to be about 280 million won, according to data from the Saenuri Party lawmaker Lee No-keun, more than that of the NPS chairman and even President Park Geun-hye.
Hong supported the separation idea, which would have made his office an independent state-run corporation specializing in investment.
But former chairman Choi protested the idea, saying it would put the office under the political pressure of the central government and weaken transparency.
After pressure from the Health Ministry, Choi finally stepped down on Oct. 27. Following Choi, Hong tendered his resignation this week.
The two also clashed over the fund’s support for the controversial merger of Samsung C&T with Cheil Industries.
Choi publicly criticized Hong’s meeting with Samsung Group’s vice chairman Lee Jae-yong on July 10, just a week before the decisive meeting of investors on the merger. He said the meeting didn’t have his approval.
Opposition lawmakers said the NPS’s support for the merger was a unilateral decision by Hong.
The feud between Choi and Hong was anticipated when they took office, due to their powerful political backgrounds and profiles.
Choi, a former Health Minister in the Kim Young-sam administration, is a graduate of University of Wisconsin, a common background for many political bigwigs in the Park Geun-hye administration.
Hong, a former vice chairman of Hana Bank, is close to Finance Minister Choi Kyung-hwan. Both attended the same high school in Daegu city.
BY KIM HEE-JIN [firstname.lastname@example.org]