An unfair crackdownFinancial reform under the previous administration was aimed at removing excess regulations to level the playing field. Its goal was creating financial powerhouses with as much global competitiveness as Samsung Electronics. The current government also wants to reform Korea’s financial sector. But it wants to overhaul chaebol rather than advance the industry.
While looking for a replacement for Kim Ki-sik, who was removed as the head of the Financial Supervisory Service (FSS) after facing criticism about his suspicious fundraising and overseas trips as a lawmaker, President Moon Jae-in brought up the need for a “radical” figure for an industry that requires fundamental reforms. The Financial Services Commission (FSC) is pressuring Samsung Life Insurance to dispose of its holdings in Samsung Electronics.
The Blue House named Yoon Suk-heon — a professor who champions supervision over promotion of the financial industry — as the new FSS chief. “Chaebol and bureaucrats trying to avoid a wolf will encounter a tiger,” said Democratic Party Rep. Park Yong-jin. Yoon was the head of an advisory committee responsible for reforming the financial regulator to design the financial policy for the Moon Jae-in administration. The committee’s recommendation included fining Samsung Group Chairman Lee Kun-hee for his accounts under borrowed names, placing labor representatives on the boards of financial companies and maintaining regulations on industrial capital in financial entities.
Over-interference by progressive financial authorities could deliver another blow to businesses. The FSS reversed its earlier judgment and announced that it issued a preliminary notice to Samsung BioLogics over its accounting fraud. It accused the biopharmaceutical company of inflating the 2015 bottom line of its unit Samsung Bioepis under a different set of accounting guidelines ahead of its initial public offering. The findings should be studied by the FSC’s auditing and securities boards, but the FSS’s announcement wiped out over 8 trillion won ($7.4 billion) in the company’s stock value.
A large company or chaebol must not receive special treatment if it violates the law. But regulations must be applied consistently regardless of who is in power. If legal interpretations and applications differ when power changes hands, uncertainties grow. The business community is being hurt as this government finds fault with the policies of the last administration.
JoongAng Ilbo, May 7, Page 26