Suhyup Bank CEO vote falls short of 4-vote threshold

Shin Hak-ki gets 3 votes, KoFIU chief Lee Hyung-joo gets 2

Selection pushed to next month amid 'parachute hire' backlash

Shin Hak-ki (left), current president of Sh Suhyup Bank, and Lee Hyung-joo (right), director of the Korea Financial Intelligence Unit. [Provided by Sh Suhyup Bank and Financial Services Commission]
Shin Hak-ki (left), current president of Sh Suhyup Bank, and Lee Hyung-joo (right), director of the Korea Financial Intelligence Unit. [Provided by Sh Suhyup Bank and Financial Services Commission]

The selection of a new president for Sh Suhyup Bank has fallen through, with analysts pointing to potential conflicts of interest involving a sitting senior financial regulator and union opposition to what it called a "parachute appointment" as key factors behind the breakdown.

According to financial industry sources Tuesday, the bank's CEO Recommendation Committee held an afternoon meeting to choose a final candidate for the next president but failed to reach a decision. Current President Shin Hak-ki secured three votes — more than rival Lee Hyung-joo, director of the Korea Financial Intelligence Unit (KoFIU) — but fell one vote short of the four needed to secure the nomination.

The five-member committee comprises three officials recommended by the Ministry of Economy and Finance, the Financial Services Commission and the Ministry of Oceans and Fisheries, along with two representatives from the National Federation of Fisheries Cooperatives. A candidate must receive at least four of the five votes to be formally recommended as the next bank president.

Insiders say concerns over employment screening requirements and potential conflicts of interest surrounding Lee weighed on the vote. As a senior civil servant, the KoFIU director is subject to a three-year post-retirement employment restriction. If a close connection is found between the work of the agency where the official served in the five years before retirement and the prospective employer, the relevant public ethics committee must review the appointment.

Industry observers have noted that KoFIU directly supervises and inspects Suhyup Bank's anti-money-laundering operations, which could establish the required work-related connection. KoFIU issued a prior notice in March to impose a fine of 1 billion won ($722,000) on Suhyup Bank and has been proceeding with follow-up steps since.

Even if employment approval were granted, the scope of duties Lee could perform after taking office could be restricted — another factor seen as complicating the selection. Under the Public Service Ethics Act, matters directly handled before retirement and certain work that the former agency conducts involving the new employer may be off-limits for two years after leaving office. Since the bank president is responsible for overseeing anti-money-laundering internal controls, those restrictions could conflict directly with core duties.

In addition, the union's "parachute hire" backlash and controversy over the candidate vetting process are also seen as having influenced the outcome. The National Federation of Fisheries Cooperatives labor union earlier issued a statement saying, "If all applicants were selected for interviews, we cannot help but ask by what standards and principles the candidates were vetted and evaluated."

Within and around government circles, some have called it unusual that Lee fared poorly in the vote at all. A senior official of the current administration had applied directly for the CEO post at a private financial institution, leading many to assume his selection was likely.

"It was unexpected that Lee failed to secure sufficient support even though three of the five committee members were government-recommended officials," one industry insider said.

Meanwhile, the committee plans to reconvene early next month to select a final candidate. The next president will be confirmed after approval by the board of directors and a shareholder vote.


forest@heraldcorp.com