November 25, 2024

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[THE INVESTOR] The National Pension Service on July 5 said acting chief investment officer Cho In-sik has recently offered to resign, putting the world’s third-largest pension fund’s leadership vacant. 

Cho, head of global market division, has been temporarily filling the CIO post of the NPS’ investment management, following the sudden resignation of former CIO Kang Myoun-wook last year in July, before finishing his two-year term. The investment management is the fund’s core investment organization that manages 626 trillion won (US$559.5 billion) in assets. 

The reason behind Cho’s departure is unknown, but industry sources say it could be related to the latest internal audit over the NPS’ support of a controversial merger between two Samsung affiliates in 2015. Cho recently received a warning from the human resources committee for criticizing a NPS staff member who cooperated with the prosecution in its investigation into the Samsung case. 

Related:
NPS' hunt for new CIO continues
Support for Samsung merger was backed by false report: NPS


The NPS hasn’t found a replacement yet, as it reopened the CIO search last week after three shortlisted candidates failed to meet its qualifications.
 
Other key posts at NPS’ investment management are vacant as well. The global public market division, which is led by Cho, will lose leadership when he leaves. The team, which invests in overseas equities, bonds and foreign exchanges, said it is planning to increase the ratio of overseas equities to 30 percent of its total portfolio by 2023. 

NPS domestic equity division head Chae Jun-kyu was sacked earlier this week for allegedly creating the report that backed the merger between Samsung C&T and Cheil Industries. The domestic equity division, which handles local stocks, research and portfolios, is currently led by acting chief Kim Jong-hee, head of domestic fixed income. 

The global alternative division, which handles infrastructure and real estate investment overseas, is also led by an acting chief, Choe Hyung-don. 

With the exodus from the NPS, industry watchers are concerned on the profitability of the state-run pension fund, in addition to finding a suitable candidate to fill in the post that has been at the center of controversy. 

Ex-chief of Baring Asset Management Korea Thae Khwarg had been speculated to be the strongest candidate for the CIO, after the NPS kicked off recruitment process in February. But Khwarg was disqualified, with the NPS not stating a specific reason. 

In an interview with local media, Khwarg revealed he was recommended by Cheong Wa Dae to run for the position and had the highest score among candidates, but didn’t make it to the end, raising controversy as to the NPS’ vetting process and the government’s influence over the pension fund. “With the current governance structure, it would be difficult for the NPS to maintain its core investment principles (profitability, stability, public benefit, liquidity and independence),” said Khwarg.

By Ahn Sung-mi (sahn@heraldcorp.com)