Financial institutions run into trouble when their officials exhibit a serious lack of morals. A case in point is the chaos at Shinhan Financial Group last year that was triggered by an internal feud among its three top executives. The trio staged a crippling power struggle in total disregard for the group’s reputation and the interests of its shareholders.
The trio was ousted and the financial group is now under a new management team. But the group’s board of directors has recently caused concern by showing signs of moral laxity.
Last month, Shinhan’s board decided to lift a temporary hold on the stock options given to its former chairman Ra Eung-chan, the central figure of the ugly power game. Ra quit in October last year after he was found to have violated the law by opening bank accounts under borrowed names.
The board justified its decision by saying that although Ra violated the law on real-name financial transactions, he was not prosecuted for it. On Feb. 28, Ra exercised his stock option rights, earning some 2 billion won in appraisal profit.
The behavior of Shinhan’s board members shows they still put their personal ties with Ra before the group’s reputation and the interests of its stakeholders.
In this regard, it was right when Kim Jong-chang, governor of the Financial Supervisory Service, said Thursday that he thought the board members of the financial group were “still not in their right mind.” He made the remark during his meeting with bank CEOs.
Kim Seok-dong, chairman of the Financial Services Commission, also blasted Shinhan, saying there would be no future for the financial group unless it revamps its structure and reforms personnel management.
It was unusual for the two top financial regulators to jointly criticize a financial company in such a harsh tone. Their criticism of Shinhan’s board should be taken as a stern warning against the moral problems prevalent in Korea’s banking community.
