FSS confirms $225M embezzlement at BNK Kyongnam Bank

A BNK Kyongnam Bank branch in Seoul [YONHAP]

The Financial Supervisory Service (FSS) confirmed an employee at BNK Kyongnam Bank embezzled a total of 298.8 billion won ($225 million), the financial regulator said on Wednesday.

The figure is six times larger than some 50 billion won the FSS confirmed last month, and is the largest sum involving embezzlement to date.

The FSS announced the result following an on-site inspection it conducted since July over the embezzlement involving project financing loans.

“The embezzlement, which involved a large sum, occurred in part because of the improper functioning of the overall internal control system at BNK Financial Group and BNK Kyongnam Bank,” said the FSS in a statement.

The FSS added it will take “strict measures” against the employees related to the embezzlement and raise the efficiency of the banks’ internal control system.

The bank suffered around 59.5 billion won in damages from the embezzlement case, said the FSS.

The employee behind the scheme embezzled 298.8 billion won from 17 financing projects the person managed from 2009 through 2022, said the FSS.

The financial regulator also pointed out that BNK Financial Group and BNK Kyongnam Bank both delayed reporting the case to the FSS, citing the need for an internal inspection.

The bank had learned of the embezzlement early April, three months before the FSS launched an inspection.

The FSS also blamed the bank for ill management of loans and for not notifying the borrower when loans were executed or paid back. The regulator also noted the ill management of bank personnel that allowed the employee who embezzled funds to work in the same department and engage in the same role for 15 years.

The financial regulator said it will find out where the embezzled funds were used additionally. Currently the list includes gold bars, property purchases, golf memberships and stock purchases.

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