BNK Kyongnam Bank employee caught embezzling $43 million

BNK Kyongnam Bank headquarters in Changwon, South Gyeongsang Province / Courtesy of BNK Kyongnam Bank

By Anna J. Park

The Financial Supervisory Service (FSS) has confirmed an allegation of embezzlement amounting to 56.2 billion won ($43 million) by an employee in the project finance loan department at BNK Kyongnam Bank.

The state-run financial watchdog announced Wednesday that it initiated an emergency on-site inspection on July 21, immediately after receiving a report of the allegation, and verified the embezzlement earlier this week.

According to the FSS, it received the report from the BNK Kyongnam Bank of the embezzlement allegation against the employee, estimated initially to amount to 7.79 billion won on July 21, once the bank realized the misappropriation by the employee through its internal inspection earlier in the month.

The FSS' on-site inspection confirmed a total of 56.2 billion won had been embezzled, as of Tuesday. The bank submitted an embezzlement claim against the employee to the prosecution.

“The FSS will continue inspections on the bank as speedily as possible, focusing on getting the facts straight. We will take decisive and strict measures against the responsible employee identified throughout the investigation, as well as employees or executives accountable for internal control failures,” the FSS said.

The history of the employee's embezzlement dates back to the summer of 2016, when the official pocketed 7.79 billion won out of an insolvent project financing loan of 16.9 billion won. The employee made further attempts several times until May last year, with the amount of embezzled money reaching 56.2 billion won in total.

As the employee had been working at the real estate project financing department for over 15 years from December 2007 to April 2023, the FSS is currently investigating other dealings by the department during the period. The financial authority has also intensified inspections on the regional bank's internal controls, as the employee's misappropriation of bank funds could partially be ascribed to a failure of the bank's internal control system.