[Exclusive] Saemaeul Geumgo Focuses on 'Reform'... Ministry of the Interior Extends Innovation Support Team for 6 Months

Launched in November last year... Initially scheduled to end activities this month
Internal decision to 'extend operation' before directive revision
Task to amend law pursued after the 22nd National Assembly convenes

The Ministry of the Interior and Safety has decided to extend the activity period of the Saemaeul Geumgo Innovation Support Group, which was originally scheduled to end this month, by six months. With the task force continuing until November, when the 22nd National Assembly convenes, attention is focused on whether it can achieve innovation results for Saemaeul Geumgo that involve legislative amendments.

According to the Ministry of the Interior and Safety on the 16th, the Saemaeul Geumgo Innovation Support Group, whose activity period expires on the 28th, has decided to extend its operation period. The support group is a temporary task force (TF) organization established last year, currently consisting of about seven administrative officers and clerks.

An official from the Ministry of the Interior and Safety explained, "We decided to extend the operation in May as the operation period was about to expire. Internal decision-making has been completed, and ultimately, once the directive is revised, the activity period will be extended." The support group's duration is set by the Ministry of the Interior and Safety directive until May 28.

An MG Saemaeul Geumgo branch in a market in Seoul. Photo by Huh Younghan younghan@

The Saemaeul Geumgo Innovation Support Group was formed in response to adverse issues related to Saemaeul Geumgo that have continued since last year. Saemaeul Geumgo faced a bank run (massive withdrawal of deposits) crisis last year due to suspicions of insolvency related to project financing (PF) loans. There was also CEO risk.

Former Saemaeul Geumgo Central Association Chairman Park Cha-hoon was tried on charges of receiving bribes amounting to billions of won during his tenure and was sentenced to six years in prison last February. Recently, illegal loan incidents were also uncovered. In March last year, an executive-level managing director colluded with an illegal loan broker to create false contracts, pretending to buy and sell 75 offices in a used car trading complex at prices higher than market value, and applied for secured loans, resulting in illegal loans amounting to 71.8 billion won.

In response to this crisis, the Saemaeul Geumgo Central Association established an advisory body called the "Saemaeul Geumgo Management Innovation Committee" in August last year, consisting of 12 members: eight external experts recommended by related institutions such as the Ministry of the Interior and Safety, the Financial Services Commission, the Financial Supervisory Service, and the Bank of Korea, and four directors from Saemaeul Geumgo. After about 100 meetings and various consultations, a "Management Innovation Plan for Saemaeul Geumgo Reform" was prepared.

The plan consists of three major areas?governance and management innovation, strengthening soundness and supervisory systems for the credit unions, and rationalizing credit union management structures and enhancing depositor protection?with 10 core tasks, 29 basic tasks, and 72 detailed tasks. The organization that monitors the implementation of this management innovation plan is the Saemaeul Geumgo Innovation Support Group within the Ministry of the Interior and Safety.

After this six-month extension, when the activity period ends in November, no further extension of the organization will be possible. It will either be elevated to a regular organization or the existing Ministry of the Interior and Safety organization will take over the duties of the Innovation Support Group. An official from the Ministry said, "There are internal opinions to utilize existing divisions, and also opinions to regularize (the Innovation Support Group) to send a message that the Ministry's supervision has been strengthened."

The Innovation Support Group and the Management Innovation Implementation Promotion Council will continue their activities until November, focusing on the core innovation task of "governance restructuring." The amendment to the Saemaeul Geumgo Act, which includes abolishing the positions of executive director and supervisory director to disperse the authority concentrated in the central association president and transitioning to a professional management system, is currently pending in the National Assembly.

Since the 21st National Assembly will close this month, the likelihood of the bill passing is low. However, with the extension of the Innovation Support Group's activity period, it will be possible to pursue legislative amendments in the 22nd National Assembly.