FSS on High Alert Amid Audit and Probe into Former Governor's Fund Use

The Financial Supervisory Service (FSS) finds itself in a state of heightened tension, caught between an impending audit by the Board of Audit and Inspection and a separate investigation into the discretionary fund usage of former Governor Lee Bok-hyun. This dual scrutiny has created an atmosphere of unease within the organization, as employees worry about being implicated in past decisions.

The audit, which began with preliminary reviews, is delving into the FSS's handling of inspections and sanctions during Lee Bok-hyun's tenure. Particular attention is being paid to the practice of making "intermediate announcements" and conducting "back-briefings" before final decisions were reached. Critics argue that such practices may have violated regulations requiring confidentiality until sanctions are finalized, potentially leading to issues akin to "pre-trial detention" of information.

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Even at the time, many employees felt burdened by the intermediate inspection announcements. Now, there are concerns that the practical staff might be held responsible later.

This situation is particularly sensitive given past controversies. For instance, during Lee's term, the FSS made intermediate announcements regarding investigations into the mis-selling of Hong Kong H-share stock-linked securities (ELS) and alleged illicit loans involving former executives of Woori Financial Group and Industrial Bank of Korea. More politically charged cases, such as allegations against former lawmaker Yang Moon-suk and former lawmaker Kim Sang-hee, also saw intermediate announcements, which later drew criticism for potentially influencing public opinion or unfairly targeting individuals.

The FSS's internal sentiment is one of apprehension. "Even at the time, many employees felt burdened by the intermediate inspection announcements," one official stated. "Now, there are concerns that the practical staff might be held responsible later." This anxiety is compounded by the ongoing review of Lee Bok-hyun's discretionary fund usage, with allegations of potential misuse and violations of internal guidelines surfacing. The FSS plans to release the discretionary fund details of the current governor, Lee Chan-jin, by the end of the month.

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Whether the intermediate announcement was right or wrong is a difficult question to answer. The key will be whether there was any illegal or unfair act, not the rightness or wrongness of the intermediate announcement.