코리아타임즈 Disciplining of Bank Head

Disciplining of Bank Head      Regulators' Move Smacks of Bureaucratic Vendetta

The violation of accounting standards by the nation's largest bank is creating a major stir in the domestic financial market. The Financial Supervisory Service is pushing for the disciplining of Kookmin Bank and particularly its president, Kim Jung-tae. The bank and Kim are resisting the move, saying it is too harsh and politically motivated. Joining the fray are the bank's labor unions and foreign shareholders, turning the accounting transgression into another scandal exposing the workings of the domestic financial sector. It all started last September when Kookmin allegedly committed an accounting irregularity involving 550 billion won to save taxes while merging with its sister card company. The FSS says the punishment of Kim is not only warranted but also required to help enhance the transparency of accounting in domestic businesses. Kookmin, however, says it has done nothing wrong, as the bank had consulted with accounting experts and the National Tax Service. At the core of the controversy is whether or not the FSS' stated penalty of ``disciplinary warning'' against Kim is appropriate, and whether the regulatory body reached the decision in a rational and transparent manner. If Kim gets a disciplinary warning at the FSS meeting on Sept. 10, he cannot run for reelection as the bank's head after his three-year term expires in October. In this regard, a majority of accounting experts at the supervisory committee concluded that although Kookmin violated the rules, it only constituted simple negligence requiring light discipline. But the FSS rejected the private experts' opinions at a higher-level meeting and has sought to publicize the issue through the news media well before the formal disciplinary meeting. Even labor unionists within Kookmin are divided according to their original affiliation before the bank's merger, revealing the inner split coming as a side effect of the hasty financial restructuring. Kim's supporters, including the bank's foreign shareholders, said the FSS' move is a thinly veiled attempt to oust Kim, who did not cooperate with the government-led bailout of ailing companies. Some foreigners seem to believe Kim's exit is the result of anti-foreign sentiment and a government scheme to reassert dominance over banks. Whether Kim stays at his post or not as an individual is none of our concern. But the FSS' move gives the impression that the government still has say in who should manage a company, 78 percent of which is owned by overseas investors. Already, Kookmin's shares prices are plunging with its attraction of foreign capital faltering. Nor do people want to see government-directed financing revived after all the painful restructuring with taxpayers' money. Accounting transparency is essential for Korea but Kim's case should not be a pyrrhic victory for the government.