Updated March. 13, 2014 06:48
The Board of Audit and Inspection of Korea began an inspection of the country`s financial watchdog agency Wednesday over a large-scale theft of customer information from some of local financial institutions. The state inspectors plan to investigate whether the Financial Supervisory Service (FSS) properly supervised financial institutions after some local credit card companies had 140 million cases of customer information stolen and sold to marketing firms in the country`s largest-ever data theft case. The move came after civic groups` petition last month for an inspection.
After taking office in March last year, Choi Soo-hyun, chairman of the FSS, failed to take proper follow-up measures after a theft of 140,000 cases of customer data from Citibank Korea and Standard Chartered Bank Korea, letting a much bigger theft happen. The FSS is responsible for the latest data theft case because it went no further than sending a letter of warning to financial companies involved in the incident. Nevertheless, the FSS rejected a civil petition for an inspection into the companies last week, saying that there is "nothing exceptionally new or major" in the case.
Recently, Tokyo headquarters of Kookmin Bank, Woori Bank and Industrial Bank of Korea have been caught for illegal loans and slush funds. It is no exaggeration to say that the local financial industry is in a total crisis. In addition, the FSS failed to act until 46,000 consumers lost their money from their investment in bonds fraudulently issued by the troubled Tong Yang Group companies. It is questionable whether the financial watchdog is properly doing its job of detecting and controlling signs of abnormalities in the local financial market.
The FSS, which has been passive in supervising financial companies and protecting consumers, is active in taking care of its own people. Reportedly, about 10 former and incumbent senior FSS officials will get new jobs as inspectors at local financial companies by the end of this month. It is regrettable to see that the watchdog agency is betraying its own promise to stop such a practice, which was made in 2011 after a series of bankruptcies of local savings banks.
Such FSS official-turned inspectors were the ones who fueled the savings banks crisis by turning a blind eye to illegal loans or lobbying to incumbent FSS officials in order to protect their new employers. The inspectors at the three financial companies involved in the customer data theft were all former FSS officials. Nobody knows what kind of financial incidents will happen in the future as long as former FSS officials are in charge of inspections. The Board of Audit and Inspection should thoroughly inspect whether the FSS has been doing its job right and helping its retiring officials get new jobs at financial companies as well as whether its chief has neglected his duty.