On the 8th, the Legal Interpretation Review Committee, an advisory body of the Financial Services Commission, gave a favorable interpretation to Samsung Life in relation to the sanctions against Samsung Life’s unfair support for its affiliates, causing controversy. The photo shows the FSC office inside the government complex in Seoul. Hankyoreh data photo
On the 8th, the advisory body of the Financial Services Commission gave a favorable interpretation to Samsung Life’s sanction proposal for ‘unfair support for affiliates’. This advisory body gave a favorable interpretation to the company about Samsung Life’s non-payment of cancer insurance at a nursing hospital in August of this year, raising suspicions that the FSC might have taken steps to take care of Samsung Life. Samsung Life signed a computer system construction contract with Samsung SDS, an affiliate, from 2015 to 2017. In this contract, if the system construction is not performed within the time limit, SDS is required to pay compensation for the delay. However, Samsung Life did not claim to SDS about 15 billion won in damages for delay. In December of last year, the Financial Supervisory Service (FSS) found a case of non-payment of cancer insurance in a comprehensive examination in 2019 and made a decision to impose severe disciplinary action (institutional warning) in December last year, stating that it was a violation of the Insurance Business Act. The Insurance Business Act (Article 111) stipulates that insurance companies are prohibited from transferring assets to major shareholders and related persons free of charge, or from trading under conditions unfavorable to insurance companies. The problem arose after that. This decision will take effect only after a resolution from the Financial Supervisory Service, the upper body of the Financial Supervisory Service, before the FSC has delayed the decision for about 10 months. Then, the matter was recently referred to the Legislative Interpretation Review Committee (Law Interpretation Committee), an advisory body. The Law Interpretation Committee said that it was interpreted that non-request for compensation for delay did not correspond to the free transfer of assets. This is a difficult interpretation to understand. It is common sense to view things that have not received the money they should have received as a free transfer. Moreover, although the Enforcement Decree states that the free transfer of assets is “the act of providing tangible and intangible assets of economic value free of charge,” it is said that the Law Interpretation Committee ignored this on the logic that the Enforcement Decree cannot exceed the law. The Legislative Interpretation Committee, which consists of 9 members (4 internal members and 5 external members), is not legally binding, but the FSC follows most of its decisions. As the Act and Interpretation Committee interpreted the FSS’s main reason for sanctioning Samsung Life as not violating the law, it is highly likely that the FSC will lower the level of disciplinary action against Samsung Life. There have been many cases where the FSC has used the Law Interpretation Committee as a ‘shield’ when deciding on exemptions. Above all, the FSC should handle this issue transparently and strictly. It should also disclose what kind of people the Legislative Interpretation Committee is made up of. Otherwise, it will not be free from suspicion of ‘Take care of Samsung’.