DP parliamentary candidate faces FSS probe for misusing loan

Yang Moon-seok, who is running for a parliamentary seat representing Ansan-A District in Gyeonggi, during a candidate debate on Wednesday [JOINT PRESS CORP.]

Korea’s financial regulator is looking into allegations that a Democratic Party (DP) candidate in the upcoming April 10 general election illegally took out a 1.1 billion won ($814,815) loan.

The Daegu branch of the Korean Federation of Community Credit Cooperatives (KFCC), which has been involved in the latest scandal, said Wednesday that it will fully retrieve the loaned money from the majority liberal DP’s Yang Moon-seok, who is running for a parliamentary seat representing Ansan-A District in Gyeonggi.

“If [the borrower] secured a business loan for a housing transaction, that is not an expediency — it is downright illegal,” Financial Supervisory Service (FSS) Gov. Lee Bok-hyun told the press on Wednesday at his agency's headquarters in western Seoul.

The comment came as the FSS launched an on-site investigation into the KFCC branch on Monday.

Yang has recently been accused of taking out a business mortgage loan in 2020 under the name of his daughter, a university student at the time. The money was used to repay debt incurred in the purchase of an apartment in Seocho District, southern Seoul, which was worth over 3.1 billion won.

In 2022, the FSS conducted a major crackdown on such illegal loan issuances, uncovering nearly 1,000 cases of loans granted for business purposes that were used for housing transactions.

“If [Yang’s case] is similar to the ones uncovered during the previous crackdown, we will be able to identify such a pattern,” Lee said.

The FSS chief also mentioned that the result of the ongoing investigation will be promptly announced, hinting that the interim result may be released ahead of the general election.

Yang said on Monday that he would sell the apartment and donate any possible financial gains acquired through the sale.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]