Woori raided for dubious project financing loans

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Woori raided for dubious project financing loans

The police raided and searched Woori Bank headquarters at 10 a.m. yesterday to investigate suspected fraud in project financing loans worth 380 billion won ($317 million).

The former manager of real estate loans at Woori, identified only by surname Chun, allegedly received 2.8 billion won from a construction company in the form of a consultant fee in exchange for providing project financing loans amounting to 380 billion won. With two loans arranged by Chun in 2007 and at the beginning of this year, the company built mixed-use residential-commercial buildings in Beijing.

The police confiscated data and documents related to how the loans were requested and approved, as well as computer hard disks and other materials from the bank’s headquarters in downtown Seoul.

Chun’s alleged activities were uncovered when the Financial Services Commission investigated Woori’s trust services in June 2009. Separate from the charge against Chun, police said the trust services department violated the bank’s regulations when it guaranteed private construction firms project financing loans worth 4.2 trillion won.

The bank fired the manager of the trust services department and reported to police two employees who were involved in the fraudulent loan guarantee.

“The police came to our [Woori Bank’s] headquarters just to gather data and documents, but I am worried that other people might think that Woori has had a major financial fraud,” said a source at Woori Bank. “I hope the customers of Woori are not worried too much about this issue.”

Police suspect that project financing loans made by Woori during the past few years without thorough evaluation could be more than 1 trillion won.

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