Members of the Financial Supervisory Service labor union hold a rally in front of Cheong Wa Dae in Seoul on Wednesday, calling on FSS Gov. Yoon Suk-heun to resign for promoting certain officials who had been punished for hiring irregularities. (Yonhap)
Financial Supervisory Service Gov. Yoon Suk-heun, whose three-year term ends in two months, is facing intense backlash from the related labor union, which holds him responsible for the watchdog‘s alleged failure in personnel management.
Last month, the market watchdog reportedly promoted two officials who had received heavy sanctions due to their involvement in hiring irregularities, immediately prompting fierce criticism from union members.
“The FSS’ latest decision to promote the troubled officials is tantamount to promoting certain bankers punished for the hedge fund fiasco just because they have brought about sound work performance,” said Oh Chang-hwa, head of the labor union at the FSS.
The officials offered improper benefits to family members of high-ranking political and financial figures when they applied for jobs posted at the FSS as well as the Export-Import Bank of Korea in 2014 and 2016, respectively, according to the FSS.
“Due to its failed personnel management, public trust in the FSS, a government agency responsible for supervising irregularities in financial circles, is now at stake. We urge Yoon to step down from his position in a move to take responsibility for the incident,” he added, calling on him to express his stance on the issue by Friday.
This is the first time for the FSS labor union to request the chief to resign since Yoon took office in May 2018.
The FSS, for its part, has claimed that the officials have been excluded from promotions for a certain period of time in accordance with the punishment for their corrupt behaviors. The recent promotions came after the sanction period expired, solely based on their regular performance appraisal.
The labor union also stepped up criticism of the FSS chief for a decline in performance-based pay and bonues, attributing the cause to his power struggle with the policymaking Financial Services Commission.
In 2019, the ratio of bonus payment to FSS employees’ monthly wage -- announced by the FSC on a yearly basis -- dropped by 10 percent in 2019 after a feud between Yoon and the former FSC chief Choi Jong-ku over Yoon’s drive to acquire budget independence, officials said.
The FSS governor has long argued that the financial watchdog needs to be an independent body with its own budget to rightfully serve its role. Since 2008, the FSC has been in charge of forging regulatory policies as a ministry, while the FSS has supervised financial firms, under control of the FSC, which has the right to approve the budget for the FSS.
Financial Supervisory Service Gov. Yoon Suk-heun speaks at a parliamentary audit session held on the financial watchdog in October last year. (Yonhap)
"In a number of major economies, budget independence is considered as the most important factor to strengthen supervisory agencies’ function," said Yoon during a parliamentary session in October last year.
"Also, without a certain level of independence to make supervisory regulations, it is difficult for the FSS authorities to supervise financial markets efficiently."
The escalating internal feud at the FSS is now casting a cloud over optimistic views that Yoon could seek another three-year term.
After the authority last month notified top executives at Woori Financial Group and Shinhan Bank of heavy sanctions over a financial fraud scandal involving Lime Asset Management, some market watchers expected such a move reflected Yoon’s will to serve consecutive terms.
“A Supportive labor union has been a vital driver of Yoon’s policy drives. Since the troubled hedge fund misselling scandal has prompted market backlash against the FSS for its lax oversight of the financial companies, the recent internal feud might reduce Yoon’s influence over the supervisory body,” an industry source said.
By Choi Jae-hee (email@example.com)