Lim Suk, chairman of Solomon Savings Bank

By Kim Rahn

The head of a suspended savings bank has been apprehended on suspicion of extending illegal loans, embezzling bank money and creating a slush fund.

Investigators of a joint probe team said Wednesday they took Lim Suk, chairman of Solomon Savings Bank, into custody late Tuesday night.

Lim is the second to be detained among chiefs of four troubled savings banks suspended on May 6. The first was Kim Chan-kyung of Mirae Savings Bank who was arrested for breach of trust and misappropriation of funds while attempting to flee to China.

The 50-year-old Solomon chief is suspected of lending 150 billion won illegally to unqualified businesses and embezzling 17 billion won of company funds.

He is also suspected of raising about 10 billion won of slush funds by cooking account books. In addition, he faces allegations that he diverted 200 billion won of company funds to take over a ship investment firm and a stock brokerage.

Prosecutors also found that Lim attempted to destroy evidence of his irregularities by removing related files from his computers and dumping documents as the investigation began.

It was found the chairman offered 1.5 billion won in bonuses to all workers of the bank before his bank’s operation was suspended. Besides, he paid 3.7 billion won of some workers’ debts on behalf of them in an apparent bid to prevent them from revealing the bank’s irregularities to the prosecution.

“Through a raid into the bank’s headquarters, we secured evidence of the slush fund creation. We suspect he kept the money at foreign bank accounts to spend it for personal purposes,” a prosecutor of the investigation team said.

As he is known to have close ties with politicians and financial heavyweights, investigators suspect he may have bribed politicians and bureaucrats to facilitate the illegal loans and to prevent his bank from being suspended. “We’ll look into the allegation as well if we secure evidence that he used the slush funds for lobbying,” the prosecutor said.

They plan to seek an arrest warrant for Lim as early as today.

In 10 years Lim had turned a small credit information company into Solomon Financial Group with 5 trillion won in assets. He is a member of a group of financial industry people in Somang Presbyterian Church which President Lee Myung-bak and his brother Rep. Lee Sang-deuk of the ruling Saenuri Party attend.

The probe team is investigating another bank chief, Yun Hyun-soo of Korea Savings Bank, on suspicions that he smuggled slush funds out of the country through a loan of 70 billion won to a golf range in Malaysia.

Yun also allegedly owns a resort and a golf course in Japan under another name after possibly purchasing them using illegal loans, according to the prosecution.

As for Mirae savings bank, it was found the son of former Prime Minister Lee Su-seong has been working at the bank since 2005 as a director after Mirae Chairman Kim specially appointed him.

Upon discovery that the son’s apartment in Apgujeong-dong in southern Seoul originally belonged to Kim, prosecutors are looking into the relations between Kim and the former prime minister considering the bank’s possible lobbying of politicians through the latter.