Severe Disciplinary Actions for Sohn Tae-seung and Ham Young-joo in DLF Scandal... Partial Suspension of Operations at Woori and Hana Banks

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[Asia Economy Reporter Kangwook Cho] Sohn Tae-seung, Chairman of Woori Financial Group, and Ham Young-joo, Vice Chairman of Hana Financial Group, have received severe disciplinary sanctions from the Financial Supervisory Service (FSS) in connection with losses from the overseas interest rate-linked derivative-linked funds (DLF) incident. This is expected to become a variable in the reappointment of Sohn Tae-seung, who was solely recommended as the next chairman of Woori Financial.

On the afternoon of the 30th, the FSS held a disciplinary review committee meeting chaired by Senior Deputy Governor Yoo Kwang-yeol and decided to issue a 'reprimand warning' to Chairman Sohn and Vice Chairman Ham, holding them responsible for the DLF incident that occurred last year.

Additionally, the disciplinary review committee decided to recommend to the Financial Services Commission (FSC) a six-month partial suspension of business and imposition of fines on Hana Bank and Woori Bank for violating the obligation to establish internal control standards (under the Financial Company Governance Act). Related executives and employees were reviewed for suspensions ranging from three months to warnings.

The disciplinary review committee explained, "Considering that this case involved a major issue causing social controversy due to numerous consumer damages, we held three meetings including today's session. We thoroughly listened to statements and explanations from many company officials and the inspection department, carefully examined all facts and evidence, and made the disciplinary decision through a very cautious and in-depth review."

A reprimand warning for executives is a matter decided solely by the FSS Governor. However, institutional severe disciplinary actions must be confirmed through the FSC's resolution. If an executive receives a severe disciplinary action, they can complete their remaining term but cannot serve as an executive of a financial company for three years.

Of course, they can file an objection and apply for a provisional injunction to suspend the effect of the disciplinary action in court. However, this may be seen as confronting the FSS, which could be burdensome and leave room for ongoing controversy.

Previously, on December 30 last year, Woori Financial Group's Executive Candidate Recommendation Committee held a meeting to recommend the next chairman of Woori Financial Group and solely recommended the current chairman Sohn Tae-seung as the candidate for the next CEO chairman. According to this procedure, Sohn is scheduled to be reappointed at Woori Financial's March shareholders' meeting, but the severe disciplinary decision related to the DLF incident has increased uncertainty.

The DLF Victims Countermeasure Committee, a group of DLF investment victims, and the civic group Financial Justice Solidarity have pressured management responsibility by submitting petitions to the FSS requesting the dismissal of the management of Woori Bank and Hana Bank, the selling banks.

On this day, the severe disciplinary action preliminarily notified to Vice Chairman Ham Young-joo, who is considered a candidate for the next Hana Financial chairman, was confirmed as is, and he is expected to step down at the end of his vice chairman term.

This content was produced with the assistance of AI translation services.