[2020 National Audit] Satellite Baek, CEO of Forecast, "Reviewing Lawsuit Against DLF Responsible Person"

Seongbaek Wi, President of the Korea Deposit Insurance Corporation, is attending the National Assembly's Political Affairs Committee hearing on the 20th, providing a business report on the Korea Deposit Insurance Corporation and related matters. Photo by Dongju Yoon doso7@

[Asia Economy Reporter Park Sun-mi] At the National Assembly audit on the 20th, severe criticism was directed at the Korea Deposit Insurance Corporation (KDIC), the largest shareholder of Woori Financial Group, for failing to fulfill its role in the overseas interest rate-linked derivative-linked fund (DLF) scandal that caused massive investor losses.

During the audit, Democratic Party lawmaker Oh Ki-hyung, Justice Party lawmaker Bae Jin-kyo, and People Power Party lawmaker Yoon Doo-hyun reminded KDIC President Wi Sung-baek that "KDIC is the largest shareholder of Woori Financial Group" and criticized KDIC for supporting the reappointment of Woori Financial Group Chairman Sohn Tae-seung without holding him accountable and for not considering compensation for shareholder losses.

Lawmaker Oh stated, "Regarding the sanctions on Woori Financial Group due to the DLF scandal, Chairman Sohn Tae-seung received a disciplinary warning (banned from holding executive positions in the financial sector for three years), Woori Bank was suspended from some operations for six months and fined 19.71 billion KRW, and approximately 107.1 billion KRW was compensated to customers," adding, "Why is KDIC, as the shareholder representative, not holding the responsible parties accountable for the significant damage to Woori Bank’s shareholder value? They should consider litigation."

Oh emphasized, "Chairman Sohn, who was the bank’s CEO at the time of the DLF scandal, could be a defendant in a lawsuit," and "Since KDIC is a public institution managing public funds, it must exercise shareholder rights regarding the losses."

In response, President Wi said that KDIC had never considered shareholder representative litigation but acknowledged shortcomings in internal controls and product selection related to the DLF, stating, "We will consider (litigation) in the future."

There was also criticism regarding KDIC’s support for Sohn’s reappointment despite Sohn receiving a heavy disciplinary warning from the Financial Supervisory Service (FSS) at the beginning of the year for incomplete sales of DLFs. Sohn filed a lawsuit at the Seoul Administrative Court to cancel the FSS’s disciplinary action and requested a provisional injunction to suspend its effect, which the court accepted, leading to KDIC’s support for his reappointment.

Lawmaker Bae pointed out, "KDIC supported Chairman Sohn’s reappointment," adding, "KDIC has a duty to protect investors but did not hold Woori Financial Group accountable. Because Woori Financial Group filed a lawsuit against the FSS’s disciplinary action, KDIC exempted them from responsibility, which is why private equity fund issues have continued recently."

Lawmaker Yoon also criticized, "In finance, trust is the most important, and the CEO’s morality is crucial," and said, "Although Chairman Sohn received a heavy disciplinary action that would prevent him from working in the financial sector for the next three years, if KDIC supports his reappointment because of ongoing litigation, how can the most important issue of trust in finance be addressed?"

In response, President Wi explained, "Since Woori Bank promised to allow autonomous management centered on the major shareholders, KDIC tends to follow decisions as long as opinions do not deviate significantly," suggesting that KDIC’s support for Sohn’s reappointment was a result of respecting autonomous management.

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