Seoul to hold CEOs, holding chairs responsible for serious financial scandals

Image of SK C&C data center in Pangyo, Gyeonggi Province, that houses Kakao’s data center [Photo by Yonhap]

South Korea’s financial authority will seek to amend laws to hold company CEOs and chairs of holding financial firms responsible for serious financial scandals after Korean hedge fund Lime Asset Management’s mis-selling of risky funds, Woori Bank employee’s embezzlement and Kakao Pay’s service outage from a fire.

The Financial Services Commission on Tuesday announced the decision to seek for revisions to related laws after the taskforce meeting to improve internal control of the financial industry.

“For serious financial scandals, CEOs who have not made appropriate management efforts should take the responsibility. Chairpersons of financial holding entities also are liable for proper management and internal control,” said Kim So-young, vice chairman of the FSC.

The latest move emphasizes that business leaders can delegate authority but cannot avoid responsibility.

Following the revision, CEOs and chairpersons would not be allowed to make an excuse about their unawareness of troubles. Instead, they have to specifically explain what they have done to prevent accidents. If they prove their efforts with establishment and operation of appropriate internal control system, liability will likely be eased, the FSC said.