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2016-06-20 15:40
By Nam Hyun-woo



Hong Kyttack
AIIB vice president

Kim Yong-hwan
NH Financial chief

Questions have arisen as to whether Asian Infrastructure Investment Bank (AIIB) Vice President Hong Ky-ttack is qualified for his position.

The Board of Audit and Inspection (BAI) held Hong as the key figure responsible for the state-run policy lender’s “negligence” in controlling Daewoo Shipbuilding and Marine Engineering (DSME), which ended up in a massive failure. This came from the BAI’s report on the Korea Development Bank (KDB) and DSME.

The BAI then “advised” the Financial Services Commission and the Ministry of Personnel Management not to hire Hong as a civil servant.

Hong took the helm of the KDB, the main creditor and the largest shareholder of DSME, when the company was in a 200 billion-won incentive binge based on a 1.5 trillion won accounting fraud. Unless the prosecution, which is now looking into DSME and KDB, finds him criminally liable, he will have no setbacks ― except for his tarnished reputation ― in finishing his term.

Hong jumped to the AIIB in February and now serves as chief risk officer, controlling $50 billion. In this timely move, of course, the government endowed its patronage ― the Ministry of Strategy and Finance described Hong’s appointment as “a result that came from President Park Geun-hye’s support and the government’s efforts” ― just as he admitted to when he was at a parliamentary inspection in 2013 as a new KDB chairman.

“I was appointed by orders from above,” Hong said, adding that he had expertise in controlling KDB.

And this kind of rhetoric, this time, haunted Hong himself. In an interview with Kyunghyang Shinmun, Hong claimed that “Cheong Wa Dae and the financial authorities sent their personnel to the KDB’s affiliate,” to stress that KDB was helpless in deciding state-led 4.2 trillion-won support to DSME.

Sadly, Cheong Wa Dae, a day after the interview, said that “an individual’s claim is not worth comments.” And this Chungang University professor, who was a beneficiary of Cheong Wa Dae’s patronage but has fallen to an “individual,” had to release a statement through KDB and say “the report is far from the fact.”

Given that 7 trillion won from the state coffer has been poured into DSME, Hong’s negligence in detecting the company’s irregularities comes heavier than others who had to give up their ranking posts after being embroiled in financial debacles.

Former Hana Bank CEO Kim Jong-jun had to quit in November 2014 after the Financial Supervisory Service’s reprimand for his improper investment in a savings bank when he was chief of Hana Capital in 2011.

Also, former KB Financial Group Chairman Hwang Young-key had to step down from his post in 2009 after facing penalties from the authorities for a huge loss incurred by derivatives investments when he was Woori Bank CEO.

Pundits say all decisions are up to Cheong Wa Dae, as he was sent to the AIIB.

Facing a similar fate as Hong is Kim Yong-hwan, who headed the state-run Export-Import Bank from 2011 to 2014 and now chairs NongHyup Financial Group. The BAI also advised the government to not hire Kim as a civil servant after seeing his responsibility for the failure at Sungdong Shipbuilding and Marine Engineering.

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