Ex-top financial regulator questioned over bank scandal

By Kim Rahn

A former top financial regulator was summoned Thursday to face questioning over his alleged influence peddling for the corruption-ridden Busan Mutual Savings Bank.

Kim Jong-chang, former governor of the Financial Supervisory Service (FSS), presented himself at the Supreme Prosecutors’ Office in the morning, heading in without making any comment.

Prosecutors called him in as a “witness,” but said he could become a suspect if allegations against him are confirmed. Kim was detained late into the night.

The 63-year-old is suspected of having used his influence to limit audits on the bank at the request of Eun Jin-soo, former Board of Audit and Inspection (BAI) auditor who was arrested for allegedly taking bribes from the head of the bank.

Eun testified that he asked Kim to order a “loose” inspection of the bank and the latter told his staff to do this, according to the prosecution. Prosecutors questioned Kim about whether he took money in return for the order.

Kim is also suspected of having had the FSS and the Korea Deposit Insurance Corp.’s joint audits into the bank suspended for a week in February 2010.

They also grilled him on the allegation that he visited the BAI in April last year and demanded it retract its audit results that recommended punitive action against FSS officials for their poor inspection of savings banks.

Prosecutors also noted suspicious ties between Kim and the bank — until March 2008 when he was named FSS governor, he was a permanent director of Asia Trust, a trust company that invested 9 billion won ($8.3 million) in the bank in last June.

Kim claimed that he sold all the shares registered under his wife’s name before taking the governor position, but it was confirmed that he kept them under the name of a friend until he left the position.

Kim is the third former FSS chief to face a prosecution investigation for corruption committed while in office.

In a probe into another savings bank, prosecutors are tracing the money flow in bank accounts belonging to former Grand National Party lawmaker Gong Sung-jin and former Democratic Party lawmaker Lim Jong-seok, following confirmation that their aides received money from Samhwa Mutual Savings Bank.

The bank’s honorary chairman Shin Sam-gil told prosecutors that he gave 5 million won monthly to Gong’s sister totaling 180 million won and 3 million won to Lim’s aide, totaling 100 million won between 2005 and 2008.

Prosecutors suspect the money was sent to the lawmakers in return for influence peddling, although the two denied the allegations.