South Korea’s largest institutional investor National Pension Service (NPS) will push ahead with the adoption of the so-called stewardship code to exercise voting rights more proactively in late July despite concerns for abuse of the new authority to tame large companies amid controversy about the Blue House meddling in the recruitment of the fund’s chief investment officer.

According to a senior official from the Ministry of Health and Welfare that oversees the pension fund with 635 trillion won ($568 billion) under its management as of April, the top decision-making fund management committee will vote on the agenda of mandating stewardship code in a meeting on July 26 or 27.

About 20 countries including the U.S., U.K. and Japan have adopted their own version of stewardship code that was first introduced in Britain in 2010 with an aim to promote institutional investors’ active involvement in corporate asset management as stewards of the shareholders’ value in companies.

Companies and experts have issued worry about the Korean model which could be more aimed to contain the chaebol-owned companies rather than the design of keeping watch on executives of financial institutions commonplace elsewhere following the 2008 financial crisis.

The NPS owns nearly 10 percent in all household corporate names, and is structured to fall under government influence. NPS executives were found guilty of backing the Samsung Group merger upon the order of ousted President Park Geun-hye. More recently, the policy chief of President Moon Jae-in has come under fire for recommending the CIO position - which had been vacant for nearly a year - to an acquaintance before the opening became public.

Against the controversy, the NPS is expected to adopt much softer version as not to undermine management rights. The ministry and NPS have been putting their final touches on the guideline based on a report submitted by Korea University in March this year at their request.

By Park Yoon-gu and Choi Mira

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