[Jeongmuwi National Assembly Audit③] Hwacheondaeyu and Private Equity Funds Emerge as Contentious Issues Between Ruling and Opposition Parties

Opposition Pushes for Financial Company Witnesses Related to Hwacheondaeyu
Private Equity Fund Scandal, Financial Holding Chairperson Application Expected

[Asia Economy Reporter Kiho Sung] This year's National Assembly's Political Affairs Committee's audit is expected to cover various issues, with particular focus on inquiries related to the 'Hwacheon Daeyu controversy' and the 'private equity fund incident.' The ruling and opposition parties are currently engaged in a tense battle over witness applications related to these matters. If the witness selections proceed as planned, it will inevitably require the attendance of top financial sector leaders at the witness stand in large numbers.

According to political circles on the 22nd, the Political Affairs Committee recently held a plenary session and passed the '2021 National Audit Plan.' Along with this, a large number of related witnesses have been selected.

First, in the case of Kim Beom-su, Chairman of Kakao, six lawmakers including Yoon Kwan-seok, Song Jae-hoo, Oh Ki-hyung, Yoon Doo-hyun, Woon Joo-kyung, and Yoon Chang-hyun have applied as witnesses. Questions are expected to focus on improving unfair trade practices by platform conglomerates, the expansion of business in an octopus-like manner, the increase in user fees due to monopolistic market structures, and also on recent controversies surrounding the Financial Consumer Protection Act (FCPA).

Regarding the 'Merge Point incident,' which caused a refund chaos last month, Kwon Nam-hee, CEO of Merge Plus, will appear as a witness. The Political Affairs Committee has stated its intention to conduct a parliamentary investigation into the root causes of this incident, including suspicions of a Ponzi scheme.

The witnesses previously selected are related to the Fair Trade Commission audit scheduled for the 5th of next month. The ruling and opposition parties have entered discussions between their floor leaders regarding witnesses for the Financial Services Commission on the 6th and the Financial Supervisory Service on the 7th. Concerning the private equity fund incident, Kang Min-kook, a member of the People Power Party, has submitted a list of witnesses including Sohn Tae-seung, Chairman of Woori Financial Group. Sohn's attendance is related to the overseas-linked derivative-linked fund (DLF) controversy.

A Political Affairs Committee official said, "I understand that efforts are underway to summon the remaining financial holding company chairpersons related to the private equity fund incident as witnesses." Regarding the DLF incident, Woori and Hana Financial Groups are involved, while KB Kookmin, Shinhan, and NH Nonghyup are related to the private equity fund incident. However, considering that financial holding company chairpersons have so far not appeared at audits despite hiring irregularities and the private equity fund incident, it is widely expected that deciding on their summons will not be easy.

There is also a possibility that financial sector witnesses related to the hot issue of the Hwacheon Daeyu controversy in the Political Affairs Committee will be summoned. The opposition party is reportedly considering calling representatives related to the 'Hana Bank Consortium' as financial sector witnesses. The Hana Bank Consortium was one of the three consortia competing in the bidding for the Daejang-dong development project in Seongnam-si, Gyeonggi-do, and ultimately succeeded in the bid. This consortium consists of Hana Bank, KB Kookmin Bank, IBK Industrial Bank of Korea, Tongyang Life Insurance, and Hana Asset Trust. An opposition party official from the Political Affairs Committee explained, "This is not to embarrass anyone but to hear the circumstances and positions of the related consortium at the time to ascertain the substantive truth of the case."

However, since the ruling party strongly opposes the Hwacheon Daeyu controversy, there are also views that witness selection will not be easy. A Political Affairs Committee official said, "Although the ruling and opposition floor leaders exchanged opinions once before, no agreement was reached," and added, "The decision on witness selection for the Financial Services Commission and the Financial Supervisory Service will likely be made after Chuseok."