Ruling and Opposition Parties Unite in Criticism of Financial Authorities Over Successive Private Equity Fund Scandals

[Image source=Yonhap News]

[Asia Economy Reporter Eunmo Koo] The ruling and opposition parties jointly criticized the financial authorities during the 21st National Assembly's Political Affairs Committee briefing for the consecutive private equity fund redemption suspension incidents, following Lime Asset Management last year and recently Optimus Asset Management.

On the afternoon of the 29th, Kang Ming-guk, a member of the United Future Party, criticized Yoon Seok-heon, Governor of the Financial Supervisory Service (FSS), at the full meeting of the Political Affairs Committee, asking, "Did you fail to detect any fraudulent activities of Optimus through previous inspections?" He added, "Did the FSS conduct inspections and disciplinary committee meetings in 2017-2018 but fail to detect any fraudulent activities? There are even accusations in the public that this amounts to indirect joint perpetration or aiding and abetting," expressing strong criticism.

Governor Yoon responded, "The inspections conducted in 2017 were related to soundness, and in 2018, we investigated following a report concerning the CEO," adding, "We are currently conducting thorough investigations through various methods, so the accusation of aiding and abetting is a misunderstanding."

Regarding Kang's remark, "While the financial authorities were inactive, CEO Kim Jae-hyun and Director Yoon Seok-ho of Optimus committed fraudulent acts, causing investors to lose 500 billion won. Is the FSS not responsible for this?" Yoon replied, "The prosecution is investigating, and the FSS plans to proceed with sanctions as soon as conclusions are reached."

Members of both ruling and opposition parties pointed out that the financial authorities failed to recognize the private equity fund-related incidents, including Optimus, in advance, responded passively even after recognition, and did not properly establish countermeasures.

Yoo Dong-soo, a member of the Democratic Party of Korea, said, "There was a private equity fund status check in January and February, and although it was recognized as a high-risk operator, sales continued until June," criticizing, "The FSS was aware but did not share information." He added, "Recognition was quick, but the subsequent handling was too passive."

In response, Governor Yoon said, "At first glance, they do not admit themselves as 'bad private equity funds,' so it is like 'finding a needle on the beach.' The process of narrowing down after identification took a lot of time, and with document inspections and on-site checks, it took time, so I feel a great sense of responsibility."

Heads of financial authorities also expressed a sense of responsibility for the consecutive private equity fund incidents and apologized. Chairman Eun Sung-soo, responding to a question from Assemblyman Min Hyung-bae about the cause of the private equity fund incidents, said, "Since the deregulation in 2015, the market size has grown, and as it grew, appropriate market self-regulation and cooperation among operators were necessary, but there was a mismatch in operators such as incomplete sales," adding, "We sincerely apologize for the damages suffered by investors during this process."

Governor Yoon Seok-heon also said, "As the head of the FSS responsible for supervision and inspection, I feel a heavy responsibility," and added, "We will strengthen supervision and inspection going forward and work with the Financial Services Commission to improve the system, making every effort to prevent recurrence."

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