Woori chairman apologizes for $25.5M in improper loans to former head's relatives

Finance

Woori chairman apologizes for $25.5M in improper loans to former head's relatives

Published: 12 Aug. 2024, 16:47 Updated: 12 Aug. 2024, 16:48

SHIN HA-NEE
shin.hanee@joongang.co.kr

Woori Financial Group Chairman Yim Jong-yong speaks during a conference with analysts held at the group's headquarters in western Seoul on Thursday. [WOORI BANK]

Woori Financial Group Chairman Yim Jong-yong apologized on Monday for the recent scandal involving improper loans worth 35 billion won ($25.5 million) granted to relatives of the group’s former chairman.

“We apologize with the utmost sincerity to our customers, who have shown unwavering trust in Woori Financial Group,” said Yim during an emergency meeting attended by chief executives of subsidiaries including Woori Bank CEO Cho Byung-kyu.

The apology came as the fourth-largest financial group in Korea faces yet another loan scandal, this time involving its former chairman, Son Tae-seung, who held the top post from January 2019 to March of last year.

Former Woori Financial Group Chairman Son Tae-seung

The Financial Supervisory Service (FSS) said Sunday that Woori Bank granted 61.6 billion won in loans to borrowers with connections to the former chairman from April 2020 to January of this year.

Of the total amount, 45.4 billion won was issued to 11 borrowers for which relatives of Son have served as incumbent or former chief executives or majority stakeholders. Moreover, nine borrowers were granted loans worth 16.2 billion won, with Son’s relatives suspected to be the actual beneficiaries of the funds.

Such findings were uncovered by the financial regulator through on-site investigations conducted into Woori Bank last month. The FSS alleges that 35 billion won of the 61.6 billion won in loans were “improperly granted, without following standard guidelines and procedures.”

The bank issued a statement on Sunday confirming that the outstanding balance of the involved loans stood at 30.3 billion won as of Friday.

Woori Bank reported that 19.8 billion won in loans granted to 11 borrowers have either been experiencing payment delays or classified as nonperforming, which could cost the bank 8.2 billion won to 15.8 billion won in losses.

The bank said it imposed strict penalties in April against eight employees and executives involved in granting improper loans following an internal investigation, and reported them to law enforcement authorities for breach of duty and document forgery on Friday.

The chairman cited unreasonable orders, inappropriate workplace practices, opportunistic behavior by some employees and an insufficient internal control system as the reasons behind the latest scandal.

“We all need to thoroughly reflect on ourselves and take a hard look at our current situation with a sense of desperation,” said Yim, stressing that “establishing a healthy corporate culture is more important than refining the system and bolstering the rules.”

Woori Bank was embroiled in a major embezzlement case in June, when an employee was found to have misappropriated loans worth about 10 billion won.

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