The First Union-Nominated Outside Director in the Financial Sector Emerges... Five Years After President Moon's Campaign Promise (Comprehensive)

Union-Recommended Lee Jaemin Appointed as New Outside Director of Marine Finance Research Institute
Attorney Yoon Taehyo of Taepyongyang Also Named Outside Director
Rapid Progress Expected in Introducing Union-Recommended Director System at Other Financial Public Institutions

[Asia Economy Reporter Jin-ho Kim] The first labor union-recommended director in the financial sector has emerged at the Export-Import Bank of Korea. The 'labor union-recommended director system,' promised by President Moon Jae-in during his candidacy, has been introduced after more than five years. This development is expected to signal the potential spread of attempts to introduce labor union-recommended directors across the financial sector.

According to the financial sector on the 17th, the Ministry of Economy and Finance appointed two new outside directors in the afternoon: Lee Jae-min, CEO of the Marine Finance Research Institute, and Yoon Tae-hyo, a lawyer at Bae, Kim & Lee LLC.

These new outside directors were recommended by the labor side. Lee, a former employee of the Export-Import Bank of Korea (KEXIM), retired in July 2011, with his last position being Head of the Export Finance Headquarters. A KEXIM labor union official explained, "The recommendation was based on the importance of communication with employees," adding, "His expertise in KEXIM's work and extensive external experience were also considered."

The Ministry of Economy and Finance initially planned to appoint only one outside director. However, the KEXIM labor union proposed appointing one more outside director to enhance governance soundness, a suggestion accepted by both KEXIM and the ministry. Previously, KEXIM's board consisted of eight members: one bank president, one executive director, three inside directors, and three outside directors. With the appointment of two new outside directors, the board will increase to nine members.

The additionally appointed lawyer Yoon was recommended by the management side. He passed the 34th Judicial Examination and has served as a judge at the Seoul District Court, Seoul High Court, and as a research judge at the Supreme Court. Since 2010, he has been working at Bae, Kim & Lee LLC.

A KEXIM labor union official stated, "We expressed the opinion to increase the number of outside directors by one to improve governance," and added, "The management also agreed to increase the number by one from the perspective of ESG management."

Initially, the financial sector anticipated that the introduction of the labor union-recommended director system would be realized through this appointment at KEXIM. This expectation was influenced by Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki, who had previously taken a reserved stance but stated that evaluations would be based solely on 'qualifications and capabilities,' as well as political support from the ruling party and others.

In particular, Song Young-gil, leader of the Democratic Party of Korea, reportedly promised to "look into (the introduction of the labor union-recommended director system) thoroughly" when visiting the financial labor union's tent protest in front of the National Assembly the day before. Song also stated at the Korea Federation of Trade Unions-Democratic Party high-level meeting on the 24th of last month that he would "make efforts to reach an adjustment."

There is also analysis that the recent 'qualification controversy' involving a parachute appointment from the Blue House at Korea Growth Finance influenced this development. The delay in appointing outside directors at KEXIM was partly due to issues surrounding the nomination of a Blue House-affiliated individual. Since Korea Growth Finance eventually induced the controversial parachute appointee to 'voluntarily resign,' the aftermath is expected to positively impact KEXIM labor union's efforts to introduce the labor union-recommended director system.

Meanwhile, with the emergence of the first labor union-recommended director in the financial sector at KEXIM, discussions on the 'labor union-recommended director system,' which had been dormant, are expected to accelerate rapidly. Previously, attempts to introduce labor union-recommended directors at major commercial banks such as KB Kookmin Bank, IBK Industrial Bank of Korea, and Korea Asset Management Corporation (KAMCO) were repeatedly unsuccessful.

A financial sector official said, "Voices calling for the introduction of the labor union-recommended director system are expected to grow stronger, especially among other financial public institutions in the future."