(Bloomberg) -- With her options running out, South Korean President Park Geun-hye discarded her prime minister and finance chief Wednesday to stem the fallout from an influence-peddling scandal threatening her grip on power.
The nation's first female leader picked former presidential adviser Kim Byong-joon, 62, for the largely symbolic role of prime minister. Yim Jong-yong, chairman of the nation's financial regulator who has sought to overhaul South Korea's indebted heavy industries, was tapped as finance minister.
The moves came shortly before a Seoul court said it would determine whether to approve an arrest warrant for Choi Soon-sil, a long-time friend of Park alleged to have taken advantage of their relationship to meddle in state affairs. Prosecutors accuse her of fraud and violating laws prohibiting a public official from abusing authority.
The outcome of the investigation may go a long way in determining whether Park stays through the end of her term in early 2018. Since apologizing last week, she's given no hint that she's mulling a resignation -- which would trigger an election in 60 days.
South Korea's benchmark stock index -- one of the world's worst performers over the past month -- fell 1.4 percent on Wednesday, the biggest drop since mid-September. The won sunk as much as 1.1 percent against the dollar to its lowest level since July.
For an explainer of the scandal, click here
Hwang Kyo-ahn, the outgoing prime minister, and Yoo Il-ho, the finance chief, lost their jobs despite having no direct link to the scandal engulfing Park. The nominees to replace them are required to undergo parliamentary hearings and, if confirmed, would be Park's fourth prime minister and fifth finance minister since coming to power in February 2013.
“It's not about Park's aides, staff or cabinet -- it's about her judgment,” said Robert Kelly, a political science professor at South Korea's Pusan National University. “The housecleaning may help, but ultimately Park has to give an explanation.”
With public anger growing and her approval rating in the doldrums, Park has started shifting out people around her. Last week, she ordered 10 of her senior advisers to step down en masse. She's also accepted the resignation of her chief of staff.
Park probably won't resign any time soon because the investigation may drag on and she only has 16 months left in office, according to Park Tae-woo, a politics commentator and professor at Korea University's Institute of Sustainable Development.
Public Reaction
“She will gauge the public reaction step-by-step,” the former diplomat said. “If this doesn't help her regain support from centrists, then she would have to come up with the next step.”
Kim, her nominee for prime minister, is a pro-business policy maker who would prioritize the nation's economic hardships if appointed, according to Hong Sung-gul, a policy professor at Kookmin University where Kim teaches. Calls to Kim's office at the university went unanswered.
Yim, 57, previously helmed NH Financial Group. He has held posts in the prime minister's office and the finance ministry. As chairman of the Financial Services Commission since March last year, Yim has also enacted policies to curb household debt growth.
For more on the finance minister nominee, click here
The opposition Democratic Party criticized Park for not consulting them and said it doesn't approve of her nominations. Her own ruling Saenuri party has called for a neutral government to restore confidence at a time of sputtering economic growth and high-profile struggles at companies like Samsung Electronics Co. and Hanjin Shipping Co.
Park apologized last week in a nationally televised address for consulting Choi on “some documents” for a certain period after she took office in 2013. Prosecutors have detained Choi -- who opposition politicians have linked to a religious cult -- for questioning following accusations from opposition lawmakers that she helped make budget and staff decisions in addition to unduly pressuring a business lobby group to raise money for two foundations she controls.
--With assistance from Sam Kim To contact the reporters on this story: Kanga Kong in Seoul at kkong50@bloomberg.net, Jiyeun Lee in Seoul at jlee1029@bloomberg.net. To contact the editors responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net, Sam Mamudi, Andy Sharp
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