The chairman and chief executive of Korea's $85 billion sovereign wealth fund, ‘Hank’ Ahn Hong-chul, may have resigned on November 6 to avoid facing disciplinary action for improper conduct, according to local media.
The Board of Audit and Inspection of Korea (BAI) has reportedly found evidence of serious wrongdoing at Korea Investment Corporation and recommended that Ahn be dismissed as a result.
He has come under fire for several reasons, report local media. For one thing, his annual salary – W475 million ($406,000), a record high for the CEO of a state-run enterprise – is said to have drawn strong criticism from lawmakers.
Local press also reported that Ahn had participated in an evaluation meeting with a US investment manager about a potential mandate, despite the fact that doing so was outside his remit. According to the media, his eldest daughter worked for the firm, which was eventually included in KIC’s selection shortlist.
It has also been reported that when hiring professional managers Ahn influenced the selection of interviewers to achieve a more favourable outcome for certain applicants.
He has also been criticised for receiving complimentary room upgrades to suites with daily rates of as much as $1,700 at hotels that KIC was said to be considering investing in.
Another issue was KIC's planned – but ultimately scrapped – purchase of a stake in the Los Angeles Dodgers baseball team for about $350 million. Ahn was said to have spoken publicly about the deal when he should not have done.
Ahn has reportedly denied all these allegations.
The BAI reportedly launched an investigation into the KIC in June. According to local media, the report indicated serious issues relating to both investment practices and internal operations/system management. The watchdog has reportedly found evidence of 26 serious counts of wrongdoing and requested severe disciplinary action against seven individuals involved.
Press reports said the BAI had not only requested Ahn's dismissal but also asked the MOSF to restrict any job opportunities for him at major official entities in Korea.
The KIC had told the media at the time of Ahn's resignation: “Chairman and CEO Ahn has unexpectedly handed in his resignation for personal reasons. It has not been confirmed whether the Ministry of Strategy and Finance [MOSF] has accepted his resignation.” This comes with one year remaining of Ahn’s three-year term.
One official from the MOSF was quoted to have said on the same day: “We heard of his resignation today. Chairman Ahn did not have any talks with the Ministry about the timing of his stepping down. We can only speculate that the pressure from Korean lawmakers may have served as a major factor in his decision to quit.”
It is understood that Ahn had been under pressure from opposition parties to resign. The main opposition party, New Politics Alliance for Democracy (NPAD), reportedly demanded that he step down, citing political remarks he made on social media about late former president Roh Moo-hyun and NPAD chairman Moon Jae-in, then presidential candidate, during the 2012 election.
One local publication reported that Ahn acknowledged in October that there had been pressure for his resignation from Choi Kyung-hwan, deputy prime minister and minister of strategy and finance, and Blue House chief economic aide Ahn Jong-bum.
Kim Young, KIC’s chief operating officer, is reportedly serving as interim chairman until a replacement is found for Ahn.
The MOSF and KIC are believed to be planning to launch an open recruitment process for a qualified candidate. But local executives said the process may take much longer than might be expected – perhaps six months or so.
KIC was unavailable for comment for this article, and Ahn could not be reached by press time.
The developments at KIC have come soon after a spat at Korea’s $450 billion National Pension Service that has led to the departure of the chairman and chief investment officer, as reported.