[Financial News] The Financial Supervisory Service (FSS) inspection revealed that former and current employees at IBK Industrial Bank colluded to facilitate 51 cases of improper loans amounting to 78.5 billion won over seven years. Many of the employees involved in these irregular loans were found to have accepted bribes in the form of money or entertainment, such as golf outings. Additionally, a loan review center manager colluded with actual borrowers to approve improper loans, receiving payment and corporate cards in return. It was also uncovered that a retired employee made illicit requests to a high-ranking bank official to have a bank branch set up in a knowledge industry center they owned and provided money to the official’s child’s account.
On March 25, the FSS announced the results of its latest inspection cases of improper transactions involving stakeholders. According to the FSS, the recent examination of financial companies uncovered many cases of conflicts of interest and improper transactions linked to current and former employees, their spouses, relatives, peers from entry-level training, private clubs, and legal offices.
For IBK Industrial Bank, 58 cases of improper loans amounting to a total of 88.2 billion won, as well as improper establishment of branches, were identified. A former employee, identified as Mr. A, conspired with his spouse (a loan reviewer), peers (a loan review center head, a branch manager), and numerous employees to obtain or broker 51 improper loans totaling 78.5 billion won over seven years. There were indications that many of the employees who participated in these improper loans accepted money and entertainment.
Mr. A also made illicit requests to a high-level bank executive, with whom he was close through regular golf outings, to establish a bank branch in a knowledge industry center he owned. Soon after the branch opened, the executive’s child was fictitiously employed by Mr. A’s company, receiving payments under the guise of salary to the child’s account for two years.
The manager of the loan review center, identified as Mr. B, also colluded with actual borrowers, approved improper loans, and received money and corporate cards in return. Mr. B conspired with an actual borrower to replace the head of a related company with his wife’s sister and then approved five improper loans amounting to a total of 2.7 billion won, using a branch manager peer.
In another case, a current IBK employee invested 200 million won with a former employee, then, at the ex-employee’s request, handled improper loans (two cases amounting to 7 billion won) and received real estate valued at 4 billion won as repayment for the investment.
Furthermore, despite being aware of these systemic improper transactions through internal reports, IBK was reported to have falsely, minimized, or delayed its reporting to the FSS and intentionally deleted internal investigation data during the FSS’s inspection period.
Bithumb, a cryptocurrency exchange, was found to have improperly provided high-value housing as corporate residences without proper processes to four former and current executives, totaling 11.6 billion won in deposit guarantees. A current executive, identified as Mr. C, decided independently to use his own residence, and a former executive, Mr. D, pretended to lease a privately purchased house as a corporate residence, allocating a deposit of 1.1 billion won, which the recipient, Mr. E, used to pay outstanding purchase funds. Mr. E then rented it to a third party, receiving a deposit of 2.8 billion won.
Additionally, a law office manager at an agricultural cooperative facilitated 392 cases of improper loans totaling 108.3 billion won to cooperative employees, and a savings bank manager improperly approved real estate project financing (PF) loans for developers in exchange for bribes.
In yet another case, a director of the investment department at a finance company established three corporations under relatives’ names, registered himself as an executive, and facilitated improper loans. These loans were then fully invested in specific rental company-related allied loans.
The FSS plans to impose strict penalties on the illegal and improper actions identified in this inspection and will notify investigative agencies regarding any criminal suspicions. Furthermore, it intends to review internal control conditions to prevent conflicts of interest and develop industry-standard guidelines.