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Will Woori Financial chief seek third term?

Regulators up pressure on Son to resign over Lime fund scandal

By Song Seung-hyun

Published : Jan. 15, 2023 - 16:52

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Woori Financial Group Chairman and CEO Son Tae-seung (Woori Financial Group) Woori Financial Group Chairman and CEO Son Tae-seung (Woori Financial Group)

As Woori Financial Group is set to hold its meeting for selecting the next chairman candidates on coming Wednesday, eyes are now on whether the current head Son Tae-seung will be able to secure a reappointment for a third term.

Son’s second term ends in March.

A Woori Financial Group official told The Korea Herald on Friday that Son is included in the “long list” as a candidate for chairman of Woori Financial Group.

“After the meeting on Wednesday, final candidates will be announced on Jan. 27,” the group's official added.

The official explained that this means in order for the current chief to be included in the final, Son has to file an injunction against the financial watchdog's penalty for mis-selling funds run by now-defunct Lime Asset Management, and the court also has to accept it before Jan. 27.

This penalty is a crucial factor for Son's reappointment, as it can thwart him from landing new jobs in the finance sector for at least three years.

In December last year, Son was expected to declare his future plans after March as well as plans for filing an injunction request for the Lime funds case.

Nevertheless, even after the Supreme Court ruled in his favor regarding the financial watchdog's other penalty for improperly selling derivatives-linked products, Son kept a low profile.

Park Sang-young , a member of Woori Financial Group's board of directors, also said that it was too early to discuss Son’s reappointment in December last year.

“We do not have plans to discuss Son's reappointment at the board meeting this year. It will likely be dealt with next year,” Park said at the time.

Meanwhile, financial authorities have been pressuring Son to resign and accept his penalty.

Financial Services Commission Chairman Kim Joo-hyeon on Jan. 5 said he feels uncomfortable about Son considering filing an injunction request against the financial watchdog's penalty over the Lime funds incident.

“I feel very uncomfortable that no one is talking about how to change or improve the system,” he added.

Financial Supervisory Service chief Lee Bok-hyun also pressured the head of Woori Financial Group last year by complimenting Shinhan Financial Group Chairman Cho Yong-byeong for offering his resignation, adding that he believes that Son will “make a wise choice.” Cho’s term also ends in March.

Even if Son decides to file the injunction request with the aim of securing a reappointment despite the financial authorities' pressure, there are mixed predictions among industry insiders about the court's decision.

Jun Sung-in, an economics professor at Hongik University, said it was uncertain what the court will decide. However, in principle, Son should take responsibility.

“For the court to accept his injunction request, he has to provide proof that he did all he could in his position to prevent harm from being done to its clients,” Jun said.

Even within the FSC, there were some minority opinions that raised questions when it made a decision to apply a penalty for the Lime funds case on Son.

They cast doubt on whether Son’s not actively notifying customers of the risks could be considered as violating the finance law. The law prohibits providing conclusive information to clients on uncertain matters or informing them of content that may be misleading, according to FSC meeting minutes.