SEOUL, July 11 (UPI) — Concern is growing in South Korea that China may be building up its dominance at the Beijing-led Asian Infrastructure Investment Bank after the bank’s vice president, a South Korean, was embroiled in an accounting scandal.
China, the largest shareholder of the multilateral bank that it launched in October 2014, also demoted the position of chief risk officer from a vice-presidential to a directorial position, Yonhap news agency reported.
Oh Jeong-geun, a professor of IT and finance at Konkuk University in South Korea, said the move is designed to increase eventual Chinese influence over major projects, although there are 37 founding member states.
According to the AIIB website, since last Friday Seoul’s former chairman of Korea Development Bank Hong Ky-ttack, who was the AIIB vice president, was on a leave of absence, South Korean newspaper JoongAng Daily reported.
Hong had disappeared after being implicated in fraud and Seoul wasn’t notified of the decision beforehand, according to local press reports.
Hong was involved in accounting scandals involving Daewoo Shipbuilding and Marine Engineering and giving financial support to the firm during his tenure at KDB.
But Kim Jung-sik, an economist at Yonsei University, said some of the changes, made without consulting Seoul, may reflect patterns from the past, when China did not refrain from using “heavy-handed measures” to negotiate terms of trade with South Korea.
But Kim also said Seoul bears some of the responsibility for sending “inappropriate personnel without proper qualifications, a political figure rather than a specialist.”
Hong was appointed to one of the five vice-president positions at the AIIB in February.
South Korea’s finance ministry denied claims the Beijing move was influenced by a U.S.-South Korea decision to deploy anti-missile defense system THAAD on the peninsula.