‘Lone Star’ and former FSC senior official’s employment

Ahn Dae-hee, former Supreme Court justice, resigned as prime minister nominee due to controversy over "professional privileges granted for his previous position as justice" for earning 1.6 billion won (1.48 million U.S. dollars) for five months after starting practice as lawyer. Such privileges are available not just to a lawyer who served as senior justice or prosecutor. Retired economic bureaucrats are also paid a high salary by landing job at law firms. The most favored are officials who worked with powerful organizations, including the Financial Services Commission, the Fair Trade Commission, and the National Tax Service. Under the revised Civil Servants Ethics Act, they are prohibited from landing jobs at an organization with business interest for three years, but thereafter they can join a law firm and serve as lobbyist who assists legislative activities or lawsuits.

Yoon Yong-ro, former vice chairman of the Financial Services Commission, is found to have been appointed in late March as advisor to law firm Shin & Kim, which is serving as the legal counselor for the U.S. private equity firm Lone Star. Lone Star filed lawsuit in investor-state dispute (ISD) worth 5.13 trillion won (4.75 billion dollars) against the Korean government, claiming that it had sought to sell its stakes in Korea Exchange Bank to HSBC in 2007, but suffered losses because the deal faltered due to delayed approval by the Korean financial regulator.” Yoon was No. 2 man at the financial watchdog at that time, and was in a position to know every detail of the situation.

Yoon claims, “I am not involved in the lawsuit regarding Lone Star at all,” but his coincidental appointment has more than enough reason to cause suspicion. When Hana Financial Group took over KEB in 2011, he moved to Hana and served as KEB president until March last year. Lone Star took over KEB for 1.38 trillion won (1.280 billion dollars) in 2003, sold the bank to Hana Financial Group in 2012 and pocketed 4.7 trillion won (4.35 billion dollars) in profit. In the course of doing that, the equity fund manipulated KEB’s share price, and paid 800 million won (740,000 dollars) in bribes to the head of a civic group that staged protest against Lone Star in violation of laws.

One of the former senior government officials in charge of the case, Yoon’s joining the law firm that is serving as the legal counselor for Lone Star can hardly be considered a justifiable act. He should in no way use information that he acquired while being paid by the Korean government in a lawsuit against the state. If he cannot prove "Chinese Wall (apparatus designed to block exchange of information within a company)," he is advised to voluntarily resign. Using this incident as an opportunity, it is necessary to strengthen regulations on bureaucrats-turned professionals’ employment at a law firm.