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Brokerages favor directors from watchdog

Major securities companies are eager to recruit outside directors, mainly from government agencies with investigative power.

Their recruitment practices have been regarded as a conventional strategy aimed at lobbying the agencies to minimize fallout from possible internal irregularities.

According to sources in the stock brokerage industry, agencies whose former high-ranking officials are moving to securities firms include the prosecution, the National Tax Service and the Financial Supervisory Service.

The public has voiced criticism of the FSS over former officials who had held posts as auditors at financial companies such as commercial and savings banks.

Tong Yang Securities is considering filling two posts for the outside directors with Lee Dal-gon, a former public administration and security minister, and Lee Dong-keun, a lawyer and former senior prosecutor.

The brokerage house plans to select the two figures at its regular shareholder meeting on May 27.

In addition, Sogang University professor Cho Yoon-je is expected to be reselected as an outside director at the meeting. He worked as a presidential aide during the Roh Moo-hyun administration.

Samsung Securities will appoint Sogang University prof. Ahn Se-young, who worked for the Commerce Ministry and is a close confidant of President Lee Myung-bak, as an outside director.

The securities firm is also set to reappoint lawyer Shin Chang-eon, who has served for the Constitutional Court, the Justice Ministry and the Busan District Prosecutors’ Office.

Daishin Securities is planning a similar recruitment by holding a shareholders’ meeting in the coming days.

Candidates include former Health and Welfare Minister Kim Sung-ho, who worked for the National Tax Service and the Public Procurement Service.

Former high-ranking prosecutor Park Choong-keun will likely be picked as an outside director at Hyundai Securities.

Woori Investment & Securities is one of the players tapping the investigative agencies. It plans to scout Im Sung-kyoon, a former chief of the Gwangju District Tax Service.

Though the Korea Financial Investment Association unveiled fresh standards which instruct brokerages to select outside directors from a variety of private industries, the securities industry is still focusing on figures from state agencies.

“It is necessary to have outside directors in terms of securing soundness of financial companies,” a stock broker said. “But they are frequently taking the role as an effective shield from investigators.”

By Kim Yon-se (kys@heraldcorp.com)
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