FSS finds Woori Bank's internal system partly to blame for embezzlement case

Finance

Published: 26 Jul. 2022, 16:38 Updated: 26 Jul. 2022, 19:38

FSS finds Woori Bank's internal system partly to blame for embezzlement case

Lee Jun-su, deputy director of the Financial Supervisory Service (FSS), presents a report on the recent embezzlement incident at Woori Bank at the FSS headquarters in Yeongdeungpo District, western Seoul, on Tuesday. [YONHAP]

The Financial Supervisory Service (FSS) confirmed Tuesday that an employee at Woori Bank embezzled around 70 billion won ($53 million) from the company and the bank did not have the proper internal control system to detect the embezzlement.

The FSS said in a report that the employee embezzled a total of 69.7 billion won from 2012 through 2020.

The FSS started an investigation into the case in April when it first received a report from Woori Bank that an employee had embezzled more than 60 billion won.

According to report, in 2012 the employee made an unauthorized withdrawal of 429,493 shares, worth 2.35 billion won at the time, of a company’s convertible securities that were held by Woori Bank, by stealing a one-time password generator.

From October 2012 to June 2018, the employee embezzled 61.45 billion won from a deposit from Iranian electronics manufacturer Entekhab to acquire Daewoo Electronics. In 2010, Entekhab Industrial Group was named the preferred bidder for Daewoo Electronics in a deal which Woori Bank was the lead bank for. The deal later fell through.

From August 2014 to June 2020, the employee embezzled 5.93 billion won, which Woori Bank was managing on behalf of its creditors. The employee sent a false official notice requesting the withdrawal.

The FSS said the embezzlement was possible due to the careful planning of the employee, but also pointed out that the internal controls of Woori Bank were insufficient.

“In this case, in which close to 70 billion won was embezzled over a period of eight years at the headquarters of a large commercial bank, there is an aspect that the internal control system of the bank to prevent accidents did not work properly,” said the FSS.

The FSS plans to take necessary measures in accordance with relevant laws and procedures after a rigorous review of the employee’s illegal acts. The FSS also announced that it will, along with the Financial Services Commission (FSC), come up with an effective internal control improvement plan to prevent financial accidents so that such large-scale embezzlements do not happen again. To this end, the FSS and FSC will jointly operate a related task force.

BY LIM JEONG-WON [lim.jeongwon@joongang.co.kr]