Son Tae-seung, Chairman of Woori Financial, Loses, Overturning Previous Win
Provisional Injunction Granted, Likely to Be Reappointed at General Meeting
Ham Young-joo, Vice Chairman of Hana Financial Group (former CEO of Hana Bank), who has been on trial for nearly four years on charges of exerting influence on the recruitment of new employees at Hana Bank to ensure a specific applicant's success, was acquitted in the first trial on the 11th at 1 p.m. He is seen leaving the Seoul Western District Court while responding to questions from the press. [Image source=Yonhap News]
[Asia Economy Reporter Minwoo Lee] Ham Young-joo, the vice chairman of Hana Financial Group who was nominated as the next head, failed to resolve judicial risks before taking office. He lost the first trial in a lawsuit requesting the cancellation of the heavy disciplinary 'reprimand warning' imposed by the Financial Supervisory Service (FSS) related to the past derivative-linked fund (DLF) loss incident. Although the injunction to cancel the disciplinary action has been accepted, allowing the appointment as chairman at the shareholders' meeting on the 25th, it appears that he will start his term without fully resolving the judicial risks.
On the 14th, the Administrative Court of Seoul, Administrative Division 5 (Chief Judge Kim Soon-yeol) ruled against Ham and Hana Bank in a lawsuit filed against the Financial Services Commission and the Financial Supervisory Service Governor, among other financial authorities, seeking cancellation of business suspension and other disciplinary measures.
The court stated, "Among the reasons for the disciplinary action, all related to DLF incomplete sales were acknowledged, some violations of internal control standards were recognized, but obstruction of FSS audit duties was not acknowledged. Even considering that some disciplinary reasons were not recognized, the losses caused by incomplete sales were enormous, making it difficult to see that the plaintiffs fulfilled their investor protection duties."
The Financial Services Commission and the Financial Supervisory Service commented on the ruling, saying, "We respect the first trial court's decision and plan to carefully review the judgment content to organize our future stance."
There is a reaction of surprise in the industry. This is because Sohn Tae-seung, chairman of Woori Financial Group, won a lawsuit last August against the heavy disciplinary 'reprimand warning' related to the DLF incident. Also, in a similar case, Shinhan Financial Group Chairman Cho Yong-byeong was acquitted in the first trial related to recruitment on the 11th, so this ruling is seen as unexpected.
Nevertheless, despite this verdict, Ham is expected to be appointed as the next chairman at Hana Financial's regular shareholders' meeting and board meeting on the 25th. There is no time to recommend a new candidate, and the court has accepted Ham's injunction to cancel the heavy disciplinary action, suspending its effect. He is expected to avoid the three-year employment restriction due to the reprimand warning until the final judgment.
However, controversies are expected to continue. In the worst case, shareholders might turn their backs at the shareholders' meeting. Before the trial result, ISS, the world's largest proxy advisory firm, pointed out judicial risks and recommended voting against Ham's appointment as chairman. Foreign ownership of Hana Financial Group stood at 67.01% as of the end of last year. However, it is uncertain how much this recommendation will be reflected in the shareholders' meeting. Both Cho Yong-byeong and Sohn Tae-seung, candidates for chairman of Shinhan Financial Group and Woori Financial Group respectively, maintained their positions despite ISS opposition.
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