[2023 National Audit] Lee Bok-hyun "If there is responsibility for the wrong Lime Fund announcement, I will take responsibility"

"Dispatched Inspectors within the FSC Are Not for Political Retaliation"
Allegations of Preferential Buybacks Announced Regardless of Party Affiliation

On the 17th, Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), said regarding the announcement of the re-investigation results of the three major private equity funds Lime, Optimus, and Discovery, "If there is any wrongdoing, I will take responsibility." Regarding the announcement that the Lime fund provided preferential redemptions to some influential figures, including multi-term members of the National Assembly, he emphasized, "Whether it was the ruling party or the opposition, it would probably have been announced." He strongly denied allegations that the investigation targeted specific opposition figures with political intent, stating, "The staff do not carry out their duties while risking criminal punishment."

On the morning of the 17th, Lee Bok-hyun, the Financial Supervisory Service (FSS) Governor, is responding to questions from lawmakers during the National Assembly's Political Affairs Committee audit of the FSS held at the Financial Supervisory Service in Yeouido, Seoul.
[Photo by Yonhap News]

On the same day, at the National Assembly's Political Affairs Committee hearing held at the FSS office in Yeouido, Governor Lee responded to a question from Kim Han-kyu of the Democratic Party of Korea, who expressed concerns that FSS-dispatched prosecutors might be involved in investigating opposition politicians.

Rep. Kim said, "Since Governor Lee, who is a former prosecutor, came, the number of FSS-dispatched prosecutors increased from one to two," adding, "In February, I expressed concerns that with the additional dispatched prosecutors, they might get involved in investigations of opposition politicians, and that the FSS might consider political factors in its work." He pointed out, "The Governor at the time promised to manage work to avoid political misunderstandings, but what I feared happened. In August, when the FSS announced the private equity fund task force (TF) investigation results, the press release explicitly stated that the preferential redemptions were received by opposition party members of the National Assembly, which was reported in the media a few hours later."

Earlier, the FSS announced that the Lime fund, just before declaring a large-scale suspension of redemptions in October 2019, had used funds from other funds to provide preferential redemptions to some influential figures, including multi-term members of the National Assembly. Kim Sang-hee, a member of the Democratic Party of Korea, who was identified as one of the parties involved, strongly opposed this by staging a sit-in at the FSS lobby.

However, Governor Lee stated that the prosecutors dispatched to the FSS were not involved in the private equity fund TF or the Lime fund-related announcements and did not see the press releases beforehand. He emphasized, "If there is any wrongdoing, I will take responsibility, but the dispatched prosecutors were not involved in that part."

Governor Lee said, "In cases such as the Soci?t? G?n?rale (SG) Securities limit-down incident, illegal short selling, and responses related to virtual assets, we basically work with the exchange and the Financial Services Commission, but for short-term responses, cooperation with the prosecution is most important," adding, "We request personnel from the Ministry of Justice to bring prosecutors. Currently, there are many tasks such as unfair foreign transactions and private convertible bonds (CBs), so please understand that we need personnel responsible for cooperation with the prosecution."

He explained, "When the Senior Deputy Governor needs to coordinate with the prosecution or directly review legal matters, dispatched prosecutors can be involved in the FSS's work," but stressed, "However, prosecutors and FSS staff alike do not carry out their duties while risking criminal punishment, as they could face penalties if they make mistakes."