Administrative Lawsuit Possible Over 'DLF Severe Disciplinary Action'... What Will Sohn Tae-seung, Chairman of Woori Financial Group, Decide?

Son Tae-seung, Chairman of Woori Financial Group

[Asia Economy Reporter Kangwook Cho] Woori Financial Group is drawing attention as the 'eye of the storm' in the financial sector. With Woori Financial Group deciding to support Chairman Sohn Tae-seung's reappointment, all eyes are on the future developments of the situation. This is because if legal dispute procedures are pursued, it could be seen as a direct confrontation with financial authorities.

According to the financial sector on the 9th, Woori Financial Group has decided that if the financial authorities officially notify Chairman Sohn of the disciplinary decision, he will personally file an administrative lawsuit.

Although it is not Woori Financial Group as a financial company raising objections to the financial authorities, but Chairman Sohn himself acting as the subject, it is clear that this reflects the position of Woori Financial Group’s board of directors, which decided on Sohn’s reappointment.

Initially, there was speculation about Chairman Sohn’s possible resignation, but he strongly expressed his intention to be reappointed, and it is known that Woori Financial Group’s outside directors also showed support for him. The outside directors cited reasons such as the organizational stability of the holding company, which has only been established for one year, could be shaken if Sohn steps down, and internal legal reviews indicating that the Financial Supervisory Service’s sanctions lack clear legal grounds.

In fact, on the 7th, Woori Financial Group held a board meeting and reaffirmed the policy that "there is no reason to change the previously decided procedures and schedule regarding the group’s governance," thereby supporting Chairman Sohn’s reappointment. This means they will not change the decision made last December to recommend Sohn as the next chairman candidate for a three-year term and to separate the position of Woori Bank president, which Sohn concurrently holds, by appointing a new Woori Bank president. The final candidate selection process for the next Woori Bank president, which supports the 'Sohn Tae-seung system,' is also set to resume next week.

The Financial Supervisory Service’s disciplinary committee decided on the 30th of last month to issue a severe disciplinary warning to Chairman Sohn, holding him responsible for the losses related to the overseas interest rate-linked derivative-linked funds (DLF) incident. If the severe disciplinary action takes effect, he can complete his remaining term, but employment in the financial sector will be restricted for the next three years, making reappointment impossible. The official notification of the sanction is expected early next month. The sanction’s effect will begin at that time.

Woori Financial Group plans to appoint Chairman Sohn as the next chairman at the shareholders’ meeting on the 24th of next month. For Chairman Sohn to be reappointed while the sanction is in effect, he must nullify or suspend the sanction through litigation.

Therefore, for Chairman Sohn, who needs to immediately suspend the sanction’s effect, filing an administrative lawsuit along with a provisional injunction application is the best option.

However, although the financial company may appear to be in confrontation with the supervisory authorities, the lawsuit is expected to be filed by Chairman Sohn personally. The board expressed support for Sohn and strengthened his position, and Sohn is also reported to have repeatedly expressed his intention to be reappointed.

Accordingly, once the Financial Services Commission completes procedures such as sanction resolutions, Chairman Sohn’s side is expected to take legal action against the financial authorities after board discussions.

The Financial Services Commission will hold a regular meeting early next month to finalize decisions on institutional sanctions and fines, and the Financial Supervisory Service must notify Chairman Sohn of the severe disciplinary decision for the sanction to take effect.

If the Financial Supervisory Service notifies the sanction around Woori Financial Group’s shareholders’ meeting (March 24), Chairman Sohn’s side will have no time to respond legally. Typically, it takes 3 to 7 days from filing a provisional injunction to a court decision.

There is expected to be intense debate over the interpretation and scope of application of the 'internal control standards obligation' stipulated by the 'Financial Company Governance Act,' which is the basis for the Financial Supervisory Service’s sanction, especially regarding whether it is justified to impose severe disciplinary action on the CEO. Woori Financial Group is reportedly confident of winning if the matter goes to court.

A financial sector official said, "Chairman Sohn is expected to proceed with legal relief procedures such as administrative lawsuits going forward," adding, "Despite the appearance of a direct confrontation with the supervisory authorities, taking a tough stance indicates that they see a high possibility of success."

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