Koh Seung-beom, FSC chief nominee, answers questions during a Parliament hearing on Friday. (Yonhap)
Despite the Parliament’s approval of the nomination of the Financial Services Commission’s new chairman on Friday, concerns remain over his familial ties with the chairman of Korea Investment Holdings, the parent group of a major South Korean brokerage firm.
The FSC chief nominee, Koh Seung-beom, is the brother-in-law of Kim Nam-goo, chairman and CEO of Korea Investment Holdings, which controls Korea Investment & Securities, the nation’s second-largest securities company in terms of equity capital.
While approving Koh’s nomination, opposition lawmakers took issue with Koh and Kim’s relationship, saying it would place restrictions on him as the financial regulator’s top official, citing past instances of him skipping discussions and meetings on issues related to companies involving Kim.
According to People Power Party lawmaker Yun Ju-keyng, Koh was the only FSC committee member who had to excuse himself from meetings discussing preliminary approvals for the operation of KakaoBank, whose largest shareholder was Korea Investment Holdings at that time.
Yun and other lawmakers pointed out that the concern would linger even after he takes the helm of the financial policymaking body. The FSC oversees the financial industry, dealing with major issues such as drafting financial laws and regulations, issuing regulatory licenses and approval, as well as supervising, inspecting and sanctioning financial institutions.
Concluding the hearing session, a parliamentary committee published reports of the approval, with a warning. “It is necessary to pay special attention to the fact that his performance may be restricted and fairness compromised,” the report from the opposition party read.
Currently, Korea Investment Holdings holds a 26.97 percent stake in KakaoBank via its subsidiary Korea Investment Value Asset Management, making it the mobile-only bank’s second-largest shareholder.
The FSC and Koh stressed that his association will not limit his responsibilities as the chairman and also noted that only 23 topics, or 1 percent of the FSC’s total agenda of more than 2,200 topics over the past five years, had to do with the financial holding company.
“Korea Investment Holdings may lose out because of me, but they would have nothing to benefit from,” Koh, a former Bank of Korea Monetary Policy Board member, said during the hearing Friday, adding that any unfair practice “will never happen and I will manage any possible conflicts with honesty and integrity.”
However, some warned that the scope for error might become larger depending on how one defines issues related to Korea Investment Holdings.
Kang Min-ku, also a lawmaker with the People Power Party, said other conflicts of interest may also arise when the FSC head participates in discussions over competitors of 125 companies Korea Investment Holdings controls and many others it invested in, such as KakaoBank.
Koh is expected to take the reins of the FSC as early as Monday.