Bank President Kim Jung-tae Receives Considerable Disciplinary Measures

On September 10, the Financial Supervisory Commission decided on Kookmin Bank President Kim Jung-tae’s punishment as “reprimand and admonition.”

This is the first time a current bank president has received a punishment at or above “reprimand and admonition.” As a result, Kim will not be able to be reelected as bank president when his term ends on October 30.

The Financial Supervisory Commission communicated, “President Kim approved of the merger of Kookmin Bank and Kookmin Credit Card despite knowing about the accounting measures violation connected to the merger and neglected the supervision of sound asset management.”

Kim Dae Pyeong, director of the Financial Supervisory Service`s Bank Examination Department 2 said, “There was much talk about President Kim’s dismissal at the disciplinary discussion held on September 9, but acknowledging his services in the merge of Kookmin Bank and the Housing and Commercial Bank we decided on the punishment of reprimand and admonition.”

Kim Yong-hwan, spokesperson of the Financial Supervisory Commission, informed, “There can be debate regarding the level of disciplinary measures, but with respect to the fact that Kookmin Bank violated accounting measures, there is total agreement among specialists,” and was cautious about talk of neo government-controlled finance.

Also, Kookmin Bank Vice President Yun Jong-kyu received disciplinary measures resulting in a salary reduction for three months, Vice President Donald MacKenzie received an admonition notice, and Bank of Korea’s Monetary Finance Committee member Lee Sung-nam (an auditor of Kookmin Bank at that time) received a punishment on a level equal to an admonition notice.

However, the National Tax Service announced they would gain information from the Financial Supervisory Service related to Kookmin Bank’s violation of accounting regulations and investigate for tax law infringements.

President Kim did not appear for work and communicated through the press that he was “very sorry for troubling customers and stockholders as bank president.”

He also said, “Even now I believe the accounting method is appropriate in respect to corporate value and stockholder profit,” and added, “I will publicize my official statement after the meeting of board of directors arranged for September 13.”

On Friday, Kookmin Bank’s stocks dropped 1.8 percent from Thurday’s closing price, but when the level of disciplinary measures was announced at 10:40 a.m., the stock price rose 1.45 percent and closed at 38,600 won.

The successor for bank president will be decided on October 29 when a temporary meeting of stockholders will take place after the candidates are decided.

Considering that the handling of Kookmin Bank’s accounting issue brought up a debate of neo government-controlled finance, the successor is anticipated to be a pro-government person.

Suk-Ho Shin Cheol-Yong Lee kyle@donga.com lcy@donga.com