Nominee for small biz agency chief resigns over stock rule

The designated candidate to head the Small and Medium Business Administration resigned in a surprise move Monday, just three days after President Park Geun-hye nominated him for the post.

Hwang Chul-joo, 54, a graduate of a technical high school who went to success as a venture entrepreneur, quit just before joining the new government as a senior official, leaving the presidential office highly perplexed. Critics say the new government’s personnel management system has shown loopholes in light of Hwang`s resignation and that of Kim Jong-hoon, a Korean-American who had been nominated to head the Future Creation and Science Ministry.

“I only belatedly learned the code of conduct of civil servants that requires me to sell all stocks (in companies related to work) in my possession or entrust them to an unknown third-party financial company,” Hwang said to the reporters. “I decided to resign because I judged that I should not damage staff, customers and shareholders due to the sale of my shares.”

He apparently took a jab at business regulations when he said, “If I sell my stocks, Jusung Engineering (which Hwang founded and has led) will be dismantled. I didn`t understand the reality that even if the shares owned by a majority stakeholder who holds managerial control are (entrusted), they must be sold off by a financial company within two months.”

Hwang said he decided to resign Saturday, the day after he was nominated, adding, “I initially thought that I could serve as the chief of the agency by entrusting my stocks to a third-party financial institution without selling them off, but I learned after legal review that even entrustment of the stock to a third party would entail a situation that I will eventually have to sell the shares.”

He said he then asked the presidential office to review the regulation, but when sell-off of his shares was concluded as the only option, he decided to resign late Saturday evening. He conveyed his intent to resign to the presidential office Monday morning, to which President Park accepted.

Hwang said he consented to pre-screening of his qualifications, but learned of the stock requirement only after hearing of his nomination through the media Friday. As such, the presidential office seemed to have yet again shown a loophole in its personnel management.

A presidential office source said, “Former nominee Hwang offered to resign last weekend, saying ‘I misunderstood the system on entrusting my stocks to a third party.’ We sought to find measures to appoint him without disposal of his shares. Since it was impossible under the current system, we had no choice but to accept his resignation.”

Hwang’s resignation, following that of Kim Jong-hoon, will likely deal a major blow to the vision of “creative economy” that symbolizes “Park Geun-hye-nomics.” The president sought to appoint successful venture entrepreneurs to head the Future Ministry and the Small and Medium Business Administration and instill a spirit of challenge and convergence, but her bid has failed to fly.

“We wanted to create an environment where people well aware of the business environment would spearhead economic policy, but we will have our talent pool significantly reduced due to successive resignations,” another presidential office source said. “Using this as an opportunity, revision seems necessary of the system requiring blind entrustment of stocks to a third party.”

yhkang@donga.com