[2022 National Audit] Kim Ju-hyun, Financial Services Commission Chairman, "Same Bank Act Applies to Lone Star's 'Non-Financial Major Shareholder' Issue"

October 6 National Assembly Political Affairs Committee Audit

[Image source=Yonhap News]

[Asia Economy Reporter Shim Nayoung] Financial Services Commission Chairman Kim Juhyun responded to criticism that the Banking Act was applied differently regarding Lone Star's status as a 'non-financial major shareholder' by saying, "It is not that the Banking Act was applied differently, but that it is difficult to investigate all special relationships for foreign entities, so a different method of investigation was used."

At the National Assembly's Finance and Economy Committee audit on the 6th, Democratic Party lawmaker Lee Yongwoo pointed out, "According to a written document prepared by Kim & Chang, Lone Star's representative when acquiring Korea Exchange Bank, the non-financial major shareholder clause does not apply to foreigners," adding, "The basis for this was an opinion from a domestic banking law expert, who is currently Kim Yongjae, a standing commissioner at the Financial Services Commission."

In response, Commissioner Kim Yongjae, who appeared at the audit, said, "There was a general inquiry about whether the non-financial major shareholder system applies to foreigners, and the principle at the time was that it was difficult to apply to foreigners, which was based on academic integrity," adding, "There are asset, capital, and sales criteria for non-financial major shareholders, but Lone Star invests in various places worldwide, making a full investigation impossible."

Commissioner Kim further stated, "As an expert handling the Banking Act, I also presented opinions that were quite unfavorable to Lone Star in the disputes between Lone Star and Korea," and added, "It is natural for financial authorities to delay judgment until the Supreme Court ruling on Lone Star's stock manipulation is made."

Lawmaker Lee then questioned again, "According to the 2011 FSC press release, there was no discrimination in applying the Banking Act between domestic and foreign entities, but the position changed when the Kim & Chang opinion was available," adding, "In 2006, the FSC requested Lone Star's shareholder registry, and in 2007, the decision was postponed without disclosing this data. Didn't the FSC apply the Banking Act differently depending on the situation?"

Chairman Kim replied, "Realistically, it is difficult to identify special relationships for foreign institutions, which is why the Banking Act was amended in 2009," and said, "It is not that the Banking Act was applied differently; it is applied the same, but realistically, it is difficult to investigate all special relationships for foreign entities, so a different method of investigation from domestic cases was used."

He added, "Looking at the purpose of the Banking Act amendment, it is correct to apply the same legal principles to foreign entities as to domestic ones, but in practical terms, it is difficult to regard foreign special purpose entities the same as domestic corporations."