[Editorial Note] Avoiding Internal Management Only to Fall into Government Intervention

"Is it right for a company without a true owner to be run by a CEO and a circle of loyalists, centered only around themselves? I understand that government intervention is clearly problematic, but I am not sure if internal management is the right direction either."
President Lee Jae-myung’s recent criticism of the practice of financial holding group chairmen extending their terms brings to mind former Financial Services Commission (FSC) Chairman Kim Joo-hyun’s remarks about internal management three years ago. When controversy over government intervention in CEO appointments erupted in the financial sector at that time, Kim openly expressed his discomfort and criticized the selection of CEOs based on factional ties rather than ability. President Lee’s comment that "the same group keeps forming an inner circle and monopolizing power" echoes this sentiment.
The ongoing debate over government intervention in finance is nothing new, as evidenced by the fact that similar situations persist despite a change in president and new leadership at the financial authorities. This issue has a long history. During the Lee Myung-bak administration, members of Gogeumhoe, a group of financial professionals from Korea University, dominated the chairmanships of financial holding companies. Under the Park Geun-hye administration, it was Sogang University alumni who rose to prominence in the financial sector.
While the government claims it does not intervene in personnel decisions at individual financial firms, recent developments suggest otherwise. Following President Lee’s remarks, the Financial Supervisory Service (FSS) immediately launched a rigorous inspection of BNK Financial Group. Although this is not the same as the overt appointments of the past, the financial industry interprets it as de facto interference in corporate governance.
An even greater concern is that government intervention is not limited to personnel matters. The government and ruling party are pressuring banks to compensate for voice phishing losses, even when the banks are not at fault, and to shoulder the burden of deposits lost to rental fraud. The financial sector is being forced to absorb policy costs on multiple fronts, including contributions to the Saedo-Yak Fund for debt relief and the National Growth Fund. Lee Chanjin, Governor of the FSS, has also signaled his intention to intervene in management by suggesting that organizations such as the National Pension Service (NPS) and non-governmental organizations (NGOs) be included on the boards of financial companies.
The social responsibility of finance, its public function, transparent governance, and consumer protection are all important values and obligations. However, viewing banks as a 'second government agency' can only harm the economy. When government intervention extends from personnel to finance and management, the financial sector risks becoming nothing more than an administrative subcontractor rather than an industry.
Ultimately, this undermines innovation and autonomy, and if banks’ profitability declines and their soundness deteriorates, the real economy will suffer a severe blow. The financial authorities will soon launch a task force to improve governance. It is crucial to remember that the real issue is not who becomes chairman, but who controls that authority.
zoom@fnnews.com Reporter