Woori Financial Group is taking significant steps to strengthen its internal controls and restore trust following numerous scandals, including large-scale embezzlement and improper lending to relatives of former executives. The group announced the establishment of the Ethical Management Office, which will be tasked with monitoring executive conduct and implementing ethical policies.
On December 26, Woori Financial revealed the appointment of Lee Dong-soo, a legal expert with extensive experience as former chief prosecutor at Uijeongbu District Prosecutors’ Office, as the head of the new office. The initiative is part of Woori's efforts to bolster oversight functions as it works to improve its corporate governance following the controversies.
The Ethical Management Office will serve as the central command for overseeing the management of executives across Woori’s affiliated companies. Its responsibilities include developing and disseminatin ethical policies, monitoring executive conduct, and establishing internal reporting systems for ethical breaches. A key aspect of the office's work will be overseeing the 'personal credit information registration system for executives' relative to lending practices.
Woori's measures come after two major scandals rocked the organization, leading to increased scrutiny of their management practices. The new initiatives are expected to significantly tighten internal controls related to how executive board members' family members are treated when accessing loans.
Woori Financial Group's Chairman, Im Jong-ryong, emphasized the importance of establishing this independent body within the board to prevent any future misconduct by executives. He stated, “By installing this dedicated oversight office directly under the board, and appointing external legal experts to lead it, we are making it clear we are serious about eliminating any potential for misconduct by management.”
This recent move follows Woori Financial's establishment of the 'Group Human Resource Standard System' which eliminates the Chairperson's direct appointment authority over subsidiary executives, thereby creating separation of powers within its leadership structure. This is aimed at limiting conflicts of interest and ensuring more transparency.
Simultaneously, five of the recently retired deputy branch managers from Woori Bank are transitioning to lead six different subsidiaries, which some experts believe raises questions about Woori's commitment to true reform within its ranks. Critics argue this may undermine the intended message of thorough renewal across the company. These leadership changes come after the significant restructuring efforts initiated at Woori Bank since December 12, where 23 deputy branch manager positions were reduced to 18, showcasing the bank's intensive drive for operational efficiency.
Despite this shift, none of the promotions within Woori’s subsidiaries involved internal candidates, which contrasts sharply with practices seen at other financial groups like KB and Shinhan. The transition of experienced leaders from Woori Bank to subsidiary positions indicates the group may be relying on former insiders to guide its shift rather than promoting fresh and diverse talent.
Woori has also elevated its Anti-Money Laundering Center and Loan Inspection Department to central office-level status to reinforce supervisory functions and bolster accountability. A Financial Detection System (FDS) will also be deployed by February to help detect suspicious financial activities early, indicating Woori’s commitment to continuously strengthening internal control mechanisms.
“It is imperative we maintain rigorous internal oversight and accountability to preserve our reputational integrity,” said Im Jong-ryong, highlighting the urgency with which Woori is embracing reform. The changes align with increasing demands for financial institutions to demonstrate ethical governance.
Woori Financial Group is also preparing for the launch of the 'Ethical and Internal Control Committee' set to debut by March 2024, which will oversee the performance and evaluation of the Ethical Management Office. This committee aims to reinforce the independence of the newly created oversight body.
Lee Dong-soo, the newly appointed head of the Ethical Management Office, previously worked within several key investigative positions, including overseeing corporate and economic crime units. His extensive legal background is viewed as strategic, as Woori seeks to stabilize and reinforce its governance framework following past controversies.
Woori Financial Group’s reorganization and its focus on ethical management is seen as part of broader efforts across the financial sector to rebuild trust among consumers and regulators alike. These developments signal the group’s commitment to embedding ethical practices deeply within its corporate culture, setting the stage for sustainable and reliable banking practices moving forward.
The active approach to enforce stricter compliance measures may offer Woori Financial the opportunity to regain trust both with consumers and within the market, positioning it for growth free from the shadows of its past missteps.
