[2020 National Audit] Focus on Financial Salespersons as Witnesses in Lime and Optimus Fund Cases

Major Issues Emerge in Financial Sector Audit
NH Investment & Securities and Daishin Securities CEOs
Face Intense Scrutiny Over Incomplete Sales Responsibility

[Asia Economy Reporters Jihwan Park and Minji Lee] The Lime and Optimus scandals emerged as the biggest issues during the National Assembly's Financial Services Commission audit. At the Financial Supervisory Service (FSS) audit held on the 13th, numerous financial sector figures who sold the relevant funds appeared as witnesses, drawing focused inquiries.

During the FSS audit held that day, following the Financial Services Commission audit the previous day, intense scrutiny was directed at the issues of incomplete sales by financial companies and the supervisory failures of financial authorities surrounding the successive private equity fund scandals from Lime Asset Management last year to Optimus Fund this year. In particular, key financial figures who sold the funds, such as Jung Young-chae, CEO of NH Investment & Securities, the seller of the Optimus Fund, and Oh Ik-geun, CEO of Daishin Securities, the seller of the Lime Fund, appeared en masse as witnesses, attracting attention. Members of the Political Affairs Committee are expected to focus their questions on the circumstances of the redemption suspension, the illegality of fund sales, and responsibility for incomplete sales. The scale of damages amounts to 1.6 trillion KRW for Lime and 500 billion KRW for Optimus.

In the case of Jung Young-chae, CEO of NH Investment & Securities, inquiries related to the Optimus Fund were anticipated. NH Investment & Securities sold the largest amount of Optimus Fund, totaling 432.7 billion KRW. Optimus Management raised a total of 1.2 trillion KRW and invested in real estate and non-listed companies' bad debts, exacerbating the damage. In particular, they deceived sales companies by promising investors that they would invest in safe and high-yield public institution construction project accounts receivable to collect investment funds.

Oh Ik-geun, CEO of Daishin Securities, also took the witness stand regarding the Lime scandal. Daishin Securities is suspected of having known about the Lime Fund's insolvency and liquidity issues in advance but proceeded with large-scale sales. According to recorded materials obtained by Min Hyung-bae, a member of the Democratic Party, from the Daishin Securities Banpo WM Center Victims' Countermeasure Committee, there was evidence that Daishin Securities deliberately concentrated Lime Fund sales at the Banpo WM Center. Until now, Daishin Securities had responded by attributing the Lime scandal to the personal misconduct of the former center head Jang at Banpo WM, but there is a possibility of company-wide push. Notably, it was revealed that Assistant Manager Ahn, the wife of Vice President Kim at the branch, sold 92% of the total volume.

Representative Min stated, "Evidence has been revealed that the head office induced sales of the fund only at Banpo." Victims related to the private equity fund scandals also attended the audit as witnesses. Kwon Hyuk-kwan, representative of the Optimus Victims' Association Emergency Committee, and Gwak Seong-eun, a victim of the Lime Fund, attended as reference witnesses to provide detailed testimonies on the victims' positions and their damage cases.

Currently, the private equity fund scandals are evolving into a 'power-type gate.' The opposition is actively raising suspicions about the involvement of ruling party figures in the Lime and Optimus cases, while the ruling party is defending against these claims. In particular, the People Power Party is even discussing the introduction of a special prosecutor regarding the Optimus scandal, whereas the Democratic Party counters by calling it an exaggeration of suspicions. A financial investment industry official said, "Questions related to politically sensitive issues are expected to be asked to the securities company CEOs attending as witnesses," adding, "However, the parties involved are practically unaware of the details and are likely to respond at a general level."

Yoon Seok-heon, Governor of the Financial Supervisory Service, stated in his opening remarks at the audit, "We plan to take strict measures against confirmed illegal activities related to the recent private equity fund scandals and simultaneously work on fair compensation for victims and institutional improvements to prevent recurrence of such incidents."

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