April 20, 2024

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[THE INVESTOR] The presidential scandal that is rocking South Korea has taken its toll on the National Pension Service, with concerns about its ability to effectively manage assets worth 545 trillion won (US$473.08 billion).

Operations at the world’s third-largest pension fund appear to come to a standstill with no major overseas investor showing interest in discussing investment opportunities, according to a local news report on Feb. 10.

NPS Chairman Moon Hyung-pyo has been arrested on suspicion of pressuring the fund to support the US$8 billion merger between two Samsung subsidiaries. He used his influence as health minister to pressure it to back the deal.

The Ministry of Health and Welfare runs the pension service, and was a major shareholder in Cheil Industries and Samsung C&T when they merged.

It comes amid President Park Geun-hye’s impeachment over the scandal involving her longstanding confidante Choi Soon-sil.

Over the last year, about 50 employees have left and their vacancies have not been filled. Delivering a further blow to the personnel suffering from low morale is the relocation of the headquarters to Jeonju, scheduled for the end of this month. With many of the employee contracts expiring, and more than 20 staff members are expected to leave the company soon. 

The nation’s largest institutional investor is putting investments on hold, wary of even meeting with securities firms, asset management firms or private equity fund managers, according to industry sources, saying that the pending personnel shift is delaying any decision. The fact that five of its voting committee seats have been empty since the end of 2016 is not helping as well.

By Hwang You-mee (glamazon@heraldcorp.com)