[단독]After the Lyme Incident… FSS retirees lined up to financial companies and law firms

After the private equity crisis such as Lime and Optimus, the ransom of retirees from the Financial Supervisory Service has been rising. Last year, 19 FSS retirees re-employed at banks and securities companies. It is the most common in 10 years since 2011. Including retirees heading to large law firms, there are 35. As disputes and lawsuits related to private equity increase, large law firms such as Kim & Chang and Pacific are working to serve attorneys from the Financial Supervisory Service.

According to the data submitted by the Justice Party lawmaker Jang Hye-young on the 8th from the Financial Supervisory Service, 28 employees of the Financial Supervisory Service have been employed by the Public Service Ethics Committee for three years since the inauguration of President Yoon Seok-heon in 2018. Currently, retirees of the FSS level 4 or higher are prevented from transferring to related institutions including the financial sector for three years in accordance with the Public Officials Ethics Act. If you want to move to a financial company within the re-employment period, you must pass the employment screening of the Ethics Committee

Of the 28 people who succeeded in reemploying a financial company, 19 (68%) relocated last year when the private equity crisis such as Lime and Optimus broke out. It is the largest in 10 years since 2011. According to the annual average (2.8 people), it is more than 6 times as many.

When looking at the path of retirees’ turnover by financial company, after savings banks (7 people), securities companies (5 people), where the FSS sanctions were concentrated last year, was the most common. KB Securities, who suffered as a lime fund seller, plans to appoint Min Byeong-hyun, former vice president of the Financial Supervisory Service, as a new audit committee member at the shareholders’ meeting this month.

Most of the standing auditors of commercial banks were dominated by FSS. Hana Bank appointed former FSS General Bank Inspection Bureau Cho Sung-yeol as a standing audit committee member at a general shareholders’ meeting in March last year. Last year, Woori Bank selected Jang Byung-yong, former FSS savings bank supervisor, for a standing auditor held by a private person (former KB Capital CEO Oh Jeong-sik).

KB Kookmin Bank (Executive Auditor Jae-Sung Joo) and Shinhan Bank (Executive Auditor Huh Chang-Eon) also extended their term of office as a standing auditor, former FSS executive, by one year at the end of last year. At the Financial Supervisory Service, Ju Ju served as vice-chairman in charge of banks and small and medium-sized citizens, and Huh as vice-chairman in charge of insurance.

A high-ranking financial industry official said, “After the private equity crisis, the number of senior FSS executives has been remarkably increasing.” “It is because of the expectation that these will serve as a communication channel or a windshield between financial companies and authorities.”

It is not only financial companies that have entered the battle for the FSS manpower. As disputes and lawsuits intensify due to the aftermath of the private equity storm, large law firms are also actively seeking to recruit FSS personnel.

As a result of the JoongAng Ilbo confirmation, 16 FSS retirees have moved to the five largest law firms (Kim & Jang, Gwangjang, Yulchon, Pacific Ocean, and Hwawoo) since last year. It is more than the number of recruits in 2 years from 2017 to 18 (10 people). In particular, all 11 except 5 (advisors) are lawyers. An industry official said, “Unlike the practice of hiring executive-level personnel (of the Financial Supervisory Service) as advisors, these days, we are working hard on scouting practitioners (lawyers).”

As disputes increased after private equity funds, experts with a lot of knowledge and experience in financial accidents became valuable. It was Lime Asset Management’s suspension of redemption of funds worth KRW 1 trillion last year. At that time, Hwawoo took over three representative law firms, KB Securities, Daishin Securities, and Shinhan Investment Corp. At that time, Hwawoo emphasized that the number of attorneys (9) from the Financial Supervisory Service were the most, including attorney Lee Myung-soo, who served as the first legal team leader of the Financial Supervisory Service.

Since then, large law firms have been scouting attorneys from the Bank and Securities Inspection Bureau, one of the core inspection lines. Yulchon hired attorney Tae-yeon Kim, a team leader at the General Banking Bureau of the Financial Supervisory Service, and an attorney Hyung-min Hyung-min, who worked as a financial investment sanction review supervisor.

As the number of FSS retirees who choose to act as financial firms and large law firms increases, concerns are growing that it may negatively affect the inspection and supervisory functions of the financial authorities. The more shields there are, the more dull the’sword (sanction)’ can be.

An accountant from the Financial Supervisory Service who requested anonymity said, “If there is an executive from the Financial Supervisory Service in a financial company that went through field inspections in the past, it will be a burden.”

It is also revealed in numbers. According to the report’Economic effect of re-employment of financial companies by financial authorities for personnel from financial authorities’ published in 2019 by a research fellow at the Korea Development Institute (KDI) Lee Ki-young, “The soundness is not improved by re-employment of a financial company from the Financial Supervisory Service. The likelihood of receiving it is reduced by about 16.4%.”

An official in the financial consulting industry pointed out, “The greater the sanctions pressure from the financial authorities, the better the overall treatment, resulting in a contradiction that facilitates re-employment at financial companies.” The FSS union side added, “If the FSS’s serious promotion delays are not resolved, professional personnel such as lawyers and accountants will inevitably leave.”

Rep. Jang Hye-young said, “Reemployment at an audited organization after a supervisory authority employee retires is a factor that limits supervisory work beyond the issue of public office ethics,” he said. “A thorough re-employment review is necessary even to enhance the effectiveness and reliability of financial supervision.” Insisted.

In response, the Financial Supervisory Service said, “Not only cannot it recommend (retiree’s) auditors to financial companies, and do not participate in re-employment of retirees at all.”

Reporter Yeom Ji-hyun [email protected]