Investigate every angle

Prosecutors announced preliminary findings of a joint investigation into four mutual savings banks that financial authorities shut down in May due to inadequate capital.

Their preliminary findings focused on embezzlement and other wrongdoings by owners and senior executives that led to business shutdowns and massive losses for low-income and provincial borrowers. They plan to extend the investigation into suspicions of shady deals between the owners, bureaucrats and politicians.

According to preliminary findings, Mirae Mutual Savings Bank, Solomon Savings Bank, Korea Savings Bank and Hanju Savings Bank have extended illicit loans worth 1.288 trillion won ($1.1 billion).

The largest shareholders of the banks were charged with abusing corporate funds of 117.9 billion won and embezzling 99.2 billion won. From the shareholders, prosecutors uncovered suspicious personal wealth worth 332.7 billion won, suggesting how much the owners have fattened their pockets by robbing their customers.

The prosecution must employ all possible means to uncover and confiscate the hidden wealth of corrupt bank owners.

On the political front, prosecutors have so far made little progress despite various questions and suspicions raised over lax oversight in the troubled banks. Among questions are the suspicious 700 million won in the account of former lawmaker Lee Sang-deuk, brother of President Lee Myung-bak, and allegations that former Hana Financial Group Chairman Kim Seung-yu was involved in pressuring a Hana subsidiary to participate in capital increase in Mirae Savings Bank.

Kim Chang-kyung is said to have handed Solomon Savings Chairman Lim Suk 2 billion won worth of gold and cash in July of last year to seek his help in avoiding business suspension. The money and graft could have been used for bribery and lobbying.

Prosecutors said the investigation is still ongoing, but many question if they have the will to press further. Investigators have discovered suspicious interactions between Kim and an aide in the Blue House, but so far have not questioned the latter. A special division of the Seoul Central District Prosecutors’ Office has been separately investigating Lee’s involvement after receiving a tip that he received bribery funds from a mutual savings bank owner but has made little progress.

Lee insisted the suspicious money was profit from property sales. Politicians and bureaucrats who conspired in stealing valuable savings of common citizens must be punished. Prosecutors will lose public trust if they sidestep on suspicious political-corporate dealings.