Im Jong-ryong Bowed His Head "Chairman Gives Up Personnel Authority"..."Corporate Culture Must Change"

"Elimination of Prior Consultation for Subsidiary Executives by Chairman"
Intervention Impossible for 192 Executives
Regarding Resignation Intentions... "Organizational Stability Needed"

Lim Jong-ryong, Chairman of Woori Financial Group, bowed his head regarding allegations of improper loans to relatives of former Chairman Sohn Tae-seung. He also promised to reform the organization with a “feeling of standing at a cliff’s edge,” announcing a strong reform plan that includes relinquishing the chairman’s personnel authority over executives of Woori Financial’s subsidiaries.

Chairman Lim appeared as a general witness at the National Assembly’s Political Affairs Committee audit on the afternoon of the 10th and said, “I apologize for causing concern due to the former chairman’s improper loans,” adding, “The reason financial accidents keep occurring is that the internal control system could not keep up with the complexity of finance, and a corporate culture that values ethics was not properly established.” Among the chairmen of the four major financial groups (KB Financial, Shinhan, Hana, and Woori), Lim is the only one who has appeared at the audit so far.

Woori Bank recognized the improper loans to relatives of former Chairman Sohn in September last year and conducted a first investigation from January to March this year. Chairman Lim received related reports around March but did not inform the financial authorities. In January of this year, during Lim’s tenure, improper loans to relatives were also executed at affiliated savings banks and capital companies.

Im Jong-ryong, Chairman of Woori Financial Group, is appearing as a witness and responding to lawmakers' questions at the National Assembly's Political Affairs Committee's audit of the Financial Services Commission and Korea Development Bank held on the 10th. Photo by Kim Hyun-min kimhyun81@

In response, Chairman Lim promised to make every effort to prevent recurrence. In particular, he made a surprise announcement, saying, “I believe it is necessary to adjust the chairman’s authority and functions,” and “We will abolish the ‘prior agreement system’ related to subsidiary executives and guarantee the autonomous management of affiliates to the greatest extent possible.”

Until now, Woori Financial required prior consultation with the group chairman when appointing executives not only at the holding company but also at subsidiaries. This regulation increased the chairman’s authority, leading to criticism that improper loans occurred as a result. A Woori Financial official explained, “If the prior agreement system is abolished, the chairman will no longer be able to intervene in the appointment of 192 executives at the head of departments or higher in subsidiaries.”

Furthermore, to prevent improper loans to relatives of executives, the group decided to register the credit information of relatives of all former executives. Additionally, to strengthen checks and supervision over management, he stated, “We plan to establish an ethics internal control committee composed solely of outside directors,” and “We will create an Ethics Management Office directly under it, led by external experts, to establish a monitoring function and integrate the internal whistleblowing system.”

The credit screening management process will also be radically changed. Chairman Lim said, “We will upgrade the credit audit organization and strengthen the internal whistleblowing channels for inappropriate credit,” adding, “We will also build an FDS (Fraud Detection System) that can detect abnormal transactions electronically and implement it from next year.” He continued, “We will also create a system that allows information exchange on inappropriate credit across all affiliates.”

Chairman Lim emphasized, “I don’t think it ends with just systems or institutions. The corporate culture must change,” and said, “To change the corporate culture, continuous education, ongoing inspections, and fair rewards and punishments (信賞必罰) are necessary.”

Im Jong-ryong, Chairman of Woori Financial Group, is attending the National Assembly's hearing on the Financial Services Commission and Korea Development Bank held by the Political Affairs Committee on the 10th. Photo by Kim Hyun-min kimhyun81@

However, Chairman Lim made it clear that he has no intention of resigning. He said, “I feel a deep sense of responsibility for damaging Woori Financial’s trust due to improper loans to relatives,” but added, “What is needed now is organizational stability, strengthening internal controls, and innovation in corporate culture.”

Regarding the question suggesting that Financial Supervisory Service Governor Lee Bok-hyun pressured Chairman Lim to resign, he responded, “I don’t think it was interference in personnel matters.” He added, “I understand that Governor Lee emphasized the need for management’s awareness and reform,” and “I fully agree.”