"Even in the Financial Sector, Overseen by the Ministry of the Interior... Issues of Poor Management and Supervision [Birion Award Saemaeul Geumgo③]"

There are concerns that the reason why corruption incidents continue to occur at Saemaeul Geumgo, a representative financial institution for ordinary citizens, is due to a weaker management and supervision system compared to other mutual finance sectors. Saemaeul Geumgo falls under the jurisdiction of the Ministry of the Interior and Safety (MOIS), and unless MOIS requests it, the Financial Supervisory Service (FSS) cannot independently supervise or inspect Saemaeul Geumgo.

An FSS official stated, "Except for credit cooperatives under the Financial Services Commission, agricultural cooperatives (Nonghyup), fisheries cooperatives (Suhyup), and forestry cooperatives each have their respective supervisory authorities overseeing their credit sectors, but under current law, there is no supervisory authority over Saemaeul Geumgo." According to the FSS, regional branches of mutual finance institutions (such as Nonghyup, Suhyup, and credit cooperatives) are primarily supervised and inspected by their central associations, with the FSS inspecting the central associations. However, in the case of Saemaeul Geumgo, the Saemaeul Geumgo Central Association conducts the primary supervision, and MOIS oversees this.

According to the Saemaeul Geumgo Central Association, 150 to 200 inspectors conduct regular inspections of Saemaeul Geumgo nationwide at least once every two years. However, Saemaeul Geumgo is a massive organization with 1,297 headquarters and 3,218 branches nationwide, employing 29,600 staff members. It is difficult for around 200 inspectors to meticulously manage incidents occurring at each branch. According to the MOIS's "Saemaeul Geumgo Corruption Types Data," obtained through the office of Park Jae-ho, a member of the Democratic Party of Korea, nearly 100 corruption incidents occurred over five years: 16 in 2017, 22 in 2018, 17 in 2019, 29 in 2020, 10 in 2021, and 3 as of May 2022.

[Image source=Yonhap News]

Aside from the inspectors, there is a monitoring system called the "Regional Responsibility System" at regional headquarters, but it is difficult to expect self-purification capabilities from them as well. An employee named Lim from Saemaeul Geumgo in the Seoul area said, "I reported to the regional headquarters that the chairman misappropriated welfare funds for personal use and embezzled money, but I was told that since it was not yet the inspection's turn, I would have to wait until 2023 or, if I reported to MOIS, I would need to be lucky to have an inspection this year."

MOIS also faces criticism that it is difficult to manage Saemaeul Geumgo with only about ten staff members in the Regional Financial Support Division, and since finance is not its main task, it may lack the skills for supervision. MOIS conducts an annual "comprehensive regular audit" of the Saemaeul Geumgo Central Association. Additionally, every year, 30 Saemaeul Geumgo branches are selected for a joint government audit conducted by MOIS, FSS, and the Saemaeul Geumgo Central Association. MOIS exercises broad supervisory and directive authority, while credit and mutual aid businesses are supervised in consultation with the Financial Services Commission (delegated to the FSS).

An FSS official said, "Currently, when MOIS forms an inspection team, the FSS dispatches personnel to that team to provide support," adding, "If issues are found during inspections, they are reported within the inspection team." In other words, the FSS only provides support, and since MOIS selects the targets and basis for inspections, it is difficult for the FSS to play a proactive role. In fact, in the case of loan companies, local governments previously had management and supervisory authority, but due to increasing damage from illegal private loans, supervisory authority was transferred to the specialized Financial Supervisory Service in 2013. Experts also point out the need for the FSS to become the main supervisory body for Saemaeul Geumgo. Professor Kim Sang-bong of Hansung University's Department of Economics said, "At minimum, the FSS should be granted supervisory authority over operational risks."