[Column] Yoon Seok-heon, KIKO, and First-Class Finance

[Asia Economy Reporter Kwon Haeyoung] April 2014. Kwon Oh-hyun, then Vice Chairman (CEO) of Samsung Electronics, officially apologized regarding the 'Samsung Leukemia Incident.' He apologized to employees who died from or are battling leukemia after working at Samsung's semiconductor factories, as well as to their bereaved families, and promised to initiate compensation procedures. This came seven years after a Samsung semiconductor line factory worker died of leukemia in 2007. It was the result of Samsung Electronics Vice Chairman Lee Jae-yong's sudden acceptance of his advisors' recommendation that resolving the semiconductor leukemia issue was necessary to leap forward as a larger corporation.

Looking at the controversy over compensation for the foreign exchange derivative product 'KIKO,' which caused numerous small and medium-sized enterprises (SMEs) to go bankrupt due to the sharp rise in exchange rates during the 2008 global financial crisis, Samsung's decision six years earlier comes to mind. KIKO and the Samsung leukemia incident share many similarities. Leukemia took people's health or lives, and KIKO destroyed SMEs; both Samsung and banks have no legal obligation to compensate but are morally responsible for these incidents. The difference is that while there is controversy over the causal relationship between semiconductors and leukemia, the responsibility of banks that sold the product clearly exists in the case of corporate bankruptcies caused by KIKO. Another difference is that Samsung acted without government recommendation, whereas banks were pushed to compensate by Financial Supervisory Service Governor Yoon Seok-heon, who views KIKO as 'fraud.'

KIKO is a 'past issue.' After the Supreme Court recognized incomplete sales in 2013, the dormant issue was revived five years later when Governor Yoon, emphasizing consumer protection principles, took office in 2018. Although late, he persistently, perhaps stubbornly, focused on the KIKO compensation issue to correct the banks' mistakes and sound the alarm on consumer protection. Opinions vary on whether recalling this past issue is appropriate. However, it seems clear that banks, whose foundation is trust, cannot justifiably say it is a matter of the past and should be buried by citing the statute of limitations. KIKO is a case where finance, which should support the real economy, damaged it instead. KIKO should never have been sold to SMEs that could not bear the risk. At the very least, compensation should have started when the Supreme Court partially recognized incomplete sales.

Many financial companies dream of becoming the 'Samsung Electronics of finance.' Samsung, a global top-tier company, is demanded not only for world-class competitiveness but also for corresponding social responsibility. Samsung resolved the leukemia issue. How are banks aspiring to be top-tier dealing with the KIKO incident? Woori Bank was the first to decisively accept KIKO compensation after 12 years. Shinhan Bank, which has the largest KIKO compensation amount, was scheduled to hold a board meeting decision that afternoon. Domestic banks are now shouting for 'top-tier' beyond 'number one.' The reason why attention is drawn to the series of banks' decisions ahead of the KIKO compensation acceptance deadline on the 7th is clear.

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