Why Woori Financial Chose 'Son Tae-seung's Voluntary Resignation and Proceeding with Lawsuits'

"Burden of Forcing Reappointment Amid Authorities' Pressure... Decision for the Company"
"KB Securities Also Not Guilty... High Possibility of Administrative Lawsuit"

[Asia Economy Reporter Kwon Hyun-ji] Son Tae-seung, chairman of Woori Financial Group, whose term expires on March 25, decided on the 18th to forgo his bid for reappointment. This appears to be due to the burden felt from continuous resignation pressure by financial authorities. However, the Financial Services Commission is actively considering filing an administrative lawsuit regarding the 'disciplinary warning' penalty related to the Lime fund redemption suspension incident.

Chairman Son conveyed his intention to resign ahead of the Woori Financial Group board meeting held that afternoon. The disciplinary warning restricts new employment in the financial sector for three years; if confirmed, Son can complete his current term but cannot be reappointed. The Woori Financial board held its first executive recommendation committee meeting that day to create a long list of candidates for the next chairman. With Son removed from the candidate list, competition among internal and external candidates is expected to intensify.

Internally, Lee Won-duk, president of Woori Bank, and Park Hwa-jae, president of Woori Financial Group's Business Support Division, are being mentioned. Former executives including Kim Yang-jin, former senior vice president of Woori Bank, and Nam Ki-myeong, former vice president of Woori Bank, are also being considered. Externally, former Financial Services Commission chairman Lim Jong-ryong and former Industrial Bank of Korea president Cho Jun-hee have been floated as candidates.

Son Tae-seung's Resignation as a Matter of Principle

Many interpret that the reason Chairman Son decided to resign was the burden of appearing to be in conflict with financial authorities. Even if Son succeeded in his reappointment amid increasing pressure from financial authorities over the Son issue, it would be difficult to carry out his term smoothly thereafter.

A senior Woori Bank official explained, "Considering the impact on the company if he chose reappointment under pressure from authorities, he likely could not ignore it. Since there are many tasks to be done, including new businesses, the direction was set to resign as a matter of principle but proceed with filing a lawsuit."

Filing Administrative Lawsuit... Attempting to Restore Honor Later

The Financial Services Commission is actively considering filing an administrative lawsuit regarding the disciplinary actions imposed on Woori Bank and Chairman Son related to the Lime Asset Management incident. Last year, the FSC imposed a three-month suspension on Woori Bank for new sales of private equity funds and a fine of 7.66 billion KRW, and issued a disciplinary warning equivalent to restricting executive employment for 3 to 5 years to Chairman Son.

The senior official stated, "Since KB Securities, which was a Lime fund seller, was acquitted, the possibility of Woori Financial filing an administrative lawsuit has increased." On the 12th, the court acquitted KB Securities employees accused of intentional sales of Lime funds. Former Lime vice president Lee Jong-pil, suspected of collusion with them, was also acquitted.

If Chairman Son and Woori Bank proceed with an administrative lawsuit against the FSC, disputes are expected over whether Woori Bank's Lime fund sales can be considered 'improper solicitation,' whether Son is the ultimate person responsible (supervisor) for the incident, and whether the disciplinary level is consistent with that of Shinhan Bank.

Another Woori Bank official said, "Although we won the final victory in the administrative lawsuit filed last December to cancel the Financial Supervisory Service's heavy sanctions related to the DLF (Derivative Linked Fund) incident, ultimately Chairman Son made a decision to bear dishonor for the company this time. Still, by proceeding with the administrative lawsuit, he showed the will to restore his honor later."

[Image source=Yonhap News]

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