Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Watchdog blamed for botched probe of Woori embezzlement
Police investigators enter Woori Bank's headquarters for a search and seizure operation in Seoul, Monday. Yonhap
By Lee Min-hyung
By Lee Min-hyung
The Financial Supervisory Service (FSS) has come under fire for a botched inspection of Woori Bank's latest embezzlement scandal.
An employee of the lender allegedly embezzled 61.4 billion won ($48.49 million) between 2012 and 2018 while working at its corporate financing division. The official has been arrested and is being investigated.
But the watchdog, which carried out 11 inspections on the lender's divisions including the risk management and internal auditing departments in 2016 and 2018, failed to find any suspicious signs.
A spokesman for the watchdog was unavailable for comment.
The FSS has also launched an investigation into Deloitte Anjin, which was Woori's auditor between 2004 and 2019.
FSS Governor Jeong Eun-bo pledged to overhaul the authority's inspection system.
“We will also investigate why the FSS failed to uncover the case during the regular inspection,” he said Friday after a meeting with leaders of foreign financial firms here.
Woori Bank reiterated its willingness to cooperate with further investigations over the incident and pledged to take full-fledged measures to prevent the recurrence of such incidents.
“We have requested investigative authorities to look into the case and Woori will carry out our independent investigation as well,” Woori Bank CEO Lee Won-duk said in a message to its employees last week.
The lender also promised to keep sharing additional details while conducting the investigation.
“We will also try our best to minimize any possible loss from the incident and take active measures to retrieve the embezzled money,” Lee said.
A spokesman for Woori also said the bank will tighten its internal audit system to prevent similar financial incidents from taking place again.
“Woori will look into why we failed to detect the embezzlement in advance, and take follow-up measures by tightening internal inspection,” an official from the lender said.
On Monday afternoon, the police launched a search and seizure operation into the headquarters of Woori Bank in Seoul.
Industry officials said the only way to prevent such an incident is for each financial firm to tighten its internal inspection system.
“Even if financial watchdogs carry out regular inspections, it is realistically impossible for them to look into all the financial statements from banks or any financial companies,” an official at a major commercial bank said.
“Strengthening an internal inspection system is de facto the only measure to reduce the likelihood of the recurrence of such a financial scandal,” the official said. “But the FSS will also be subject to controversy for its poor inspection of the incident.”
Depending on the result of the investigation, chances are Woori Financial Group Chairman Son Tae-seung may be mired in another legal dispute, as the FSS left open the possibility of holding top management of Woori responsible for the scandal, citing their poor internal control.