Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Eximbank under investigation for bribery
gettyimagesbank
By Park Jae-hyuk
Export-Import Bank of Korea CEO Bang Moon-kyu
By Park Jae-hyuk
The Export-Import Bank of Korea (Eximbank) has been under police investigation over the past two months for bribery charges against its employees, according to the Seoul Metropolitan Police Agency's sophisticated crime investigation division, Sunday.
The employees were allegedly entertained by securities firms in exchange for selecting them as lead managers for the state-run bank's issuance of bonds denominated in foreign currencies.
When financial institutions issue foreign bonds to secure key currencies, such as the U.S. dollar, the euro and the Japanese yen, brokerages and banks selected as lead managers are supposed to attract foreign investors, using their wide investment networks in each country.
Eximbank has mostly selected foreign brokerages and banks as lead managers for its issuance of foreign bonds.
Given that lead managers have received a 0.3 percent commission on the amount issued, brokerages and banks have competed fiercely for the job.
Between January 2014 and December 2018, Eximbank issued foreign bonds collectively worth 25.9 trillion won ($22.3 billion) and gave 76.8 billion won to lead managers.
In July, however, the Board of Audit and Inspection (BAI) said it discovered that the state-run bank had manipulated evaluation sheets during the period, as it had selected lead managers in advance of the evaluation.
According to the BAI, the Eximbank workers in charge of the selection process went to investor roadshows in New York, London and Hong Kong with employees of brokerages that hosted the events.
The Eximbank workers promised to the brokerages there that the state-run bank would select those brokerages as lead managers for the forthcoming issuances of foreign bonds.
The BAI urged Eximbank to punish the employees.
In addition, the watchdog gave relevant materials to the police in September, suspecting the Eximbank employees of getting illegally entertained by brokerages when they were in foreign countries.
Since then, the police have investigated the bank to find out whether or not the accusation is true.
The police doubt that bribes allowed underperforming brokerages to be selected as lead managers.
If the suspicion turns out to be true, it means Eximbank has overpaid lead managers, despite the issuance of foreign bonds under unfavorable conditions.
“In accordance with what the BAI said, we finished reforming our systems and punishing the employees involved in this issue,” an Eximbank official said. “We will also cooperate with the police investigation as much as we can.”