FSS inspections failed to catch alleged embezzlement at Woori Bank

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FSS inspections failed to catch alleged embezzlement at Woori Bank

A Woori Bank employee under police investigation for allegedly embezzling more than 60 billion won ($47 million) arrives at the Seoul Central District Court for a hearing on April 30. [YONHAP]

A Woori Bank employee under police investigation for allegedly embezzling more than 60 billion won ($47 million) arrives at the Seoul Central District Court for a hearing on April 30. [YONHAP]

 
The Financial Supervisory Service (FSS) failed to catch any suspicious activity though it inspected Woori Bank more than 10 times during a period when one of the bank’s employees allegedly embezzled more than 60 billion won ($47 million).
 
The FSS investigated Woori Bank 11 times from 2012 through 2018, according to the FSS report.
 
The investigation was conducted by a number of FSS departments, including those in charge of foreign exchange, bank risk and financial annuity.
 
The Seoul Central District Court issued an arrest warrant on Saturday for a Woori Bank employee suspected of embezzling more than 60 billion won. The court ruled that the suspect posed a flight risk and could destroy evidence.
 
The employee “attempted embezzlement three times in total, in 2012, 2015 and 2018,” said Woori Bank last week.
 
The employee’s brother was also arrested on Sunday as a potential accomplice. The police found around 10 billion won was used for the brother’s golf resort development business in New Zealand, according to local media reports. The brother reportedly suffered financial losses of around 8 billion won due to the development.
 
“The 11 inspections by the FSS also include minor inspections,” said Park Joo-hyeong, a spokesperson for FSS. “We cannot look into every employee of a company when conducting an inspection. It is difficult for an external force to uncover where money went, when the bank itself did not even know about the missing money.”
 
The money apparently came from a deposit paid by Iranian electronics manufacturer Entekhab to acquire Daewoo Electronics.
 
In 2010, Entekhab Industrial Group was named the preferred bidder for Daewoo Electronics in a deal that was supposed to involve 57.8 billion won. The deal fell through.
 
Woori Bank was the lead bank for the deal and the employee is suspected to have siphoned off part of the deposit.
 
"Police and the financial authorities are currently investigating the case as the employee's identity has been identified," Woori Bank CEO Lee Won-duk said in a message to the bank employees on Friday. "Bank employees should protect and expand customers' precious assets. We'll need more time and effort to recover and regain the trust of our customers." He added that the bank will strictly punish people found to be related to the embezzlement case.
 
“An accounting firm must check whether money is on hand and in inventory when auditing,” said FSS Gov. Jeong Eun-bo on Friday. The FSS “needs to look into the reasons why the inspections did not work.”
 
The FSS said Thursday it will immediately audit the bank’s headquarters in central Seoul.
 

BY JIN MIN-JI [jin.minji@joongang.co.kr]
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