Top Regulator to Punish Culprits of Shinhan Scandal

The head of Korea’s top financial regulatory agency said Wednesday that those who triggered the Shinhan Financial Group scandal or committed irregularities should be held accountable.

Financial Services Commission Chairman Chin Dong-soo told reporters after a conference hosted by the U.K.-based Economist Intelligence Unit at the Grand Hyatt Seoul, “It is regretful that a problem at one of Korea’s leading banks has developed into a social issue ahead of the G20 summit. All who caused the problem should be held responsible.”

On whether he meant those implicated will be forced to immediately resign, he said, “Not necessarily now,” but added, “After investigating the cause of the incident at the proper time and through the proper method, we will have those involved assume responsibility.”

Chin strongly hinted at punishment for Shinhan Financial Group Chairman Ra Eung-chan and Shinhan Bank CEO Lee Baek-soon in addition to the group’s president Shin Sang-hoon, who was suspended by the group’s board of directors.

Aside from the investigation into Shinhan, Chin said he will widen the investigation scope into the overall corporate governance of the financial sector.

“While the focus was on external directors at financial institutions last year, we will now see if improvements can be made on the matter of executives,” he said, hinting at revising the law on the corporate governance structure of financial institutions to be soon brought to a vote at the National Assembly.

Last month, the Financial Supervisory Service launched a probe into Ra’s alleged violation of real-name financial transactions. In November, it will conduct an audit on the group and Shinhan Bank.

Considering Chin’s comments, Shinhan’s governance structure will likely undergo drastic change according to the results of the investigation.

weappon@donga.com