Woori Financial Board Decides to Maintain 'Son Tae-seung's Reappointment'
Legal Battle Expected with FSC over 'DLF Heavy Sanctions'
[Asia Economy Reporter Kim Hyo-jin] The board of directors of Woori Financial Group has backed Chairman Sohn Tae-seung’s reappointment despite his heavy disciplinary action in the 'DLF scandal.' They also decided to resume the final candidate selection process for the next Woori Bank president, who will support the 'Sohn Tae-seung regime,' sometime next week.
The Woori Financial board expressed a cautious stance, assuming that the financial authorities’ sanction procedures have not yet been completed. While supporting Chairman Sohn, they appear to have taken only a 'half step' forward to avoid unnecessary friction with the authorities.
According to financial circles on the 7th, Woori Financial officially confirmed this policy at the board meeting and plans to coordinate future schedules. At a preliminary meeting the day before, the Woori Financial board concluded that "there is no reason to change the previously decided procedures and schedules regarding the group’s governance."
This means they will not change the decision made last December to recommend Chairman Sohn as the next chairman for a three-year term and to separate the Woori Bank president position, which Sohn concurrently holds, to appoint a new Woori Bank president.
The reason is that the Financial Services Commission’s resolution procedure on sanctions against the institution (Woori Bank) remains, and the sanctions against Chairman Sohn have not yet been officially notified, making it inappropriate to make any special judgment at this time.
On the surface, they showed a principled and cautious stance, but most outside directors representing the major shareholders reportedly expressed support for Chairman Sohn during the meeting. Chairman Sohn is also said to have repeatedly expressed his intention to seek reappointment.
Accordingly, it is expected that once the Financial Services Commission’s sanction resolution and other procedures are completed, Chairman Sohn’s side will take legal action against the Financial Supervisory Service after board discussions.
The Financial Supervisory Service’s Sanctions Review Committee decided on the 30th of last month to issue a heavy disciplinary warning to Chairman Sohn, holding him responsible for the losses caused by the overseas interest rate-linked derivative-linked funds (DLF) scandal.
If the heavy disciplinary action takes effect, he can complete his remaining term, but his employment in the financial sector will be restricted for the next three years, making reappointment impossible. The official notification of the sanction is expected early next month, and the sanction’s effect will begin then.
Woori Financial plans to appoint Chairman Sohn as the next chairman at the shareholders’ meeting on the 24th of next month. For Chairman Sohn to be reappointed while the sanction is in effect, he must nullify or suspend the sanction through litigation. Woori Financial believes it has a good chance of winning in court.
The dispute is expected to be intense over the interpretation and scope of application of the 'internal control standards obligation' stipulated by the 'Financial Company Governance Act,' which is the basis for the Financial Supervisory Service’s sanction, especially regarding whether it is justifiable to impose heavy disciplinary action on the CEO.
The Financial Supervisory Service will respond through its legal office if Chairman Sohn initiates litigation and will defend the legitimacy of the sanction. A Financial Supervisory Service official said, "Nothing has been finalized yet, so there is nothing to comment on at this time."
Meanwhile, the Woori Financial Group Executive Candidate Recommendation Committee initially planned to recommend the final candidate for the next Woori Bank president by the end of last month and conducted in-depth interviews with three final candidates, but the process was temporarily suspended due to the Financial Supervisory Service’s sanction review decision.
The candidates are Kwon Kwang-seok, CEO of the National Credit Guarantee Federation of the Saemaul Geumgo Central Association; Kim Jeong-gi, head of Woori Bank’s Sales Support Division and HR Group Division (deputy president); and Lee Dong-yeon, CEO of Woori FIS. Chairman Sohn also serves as the chairman of the group’s executive candidate recommendation committee.
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