By Kang Seung-woo
Amid growing doubts over “illegal” withdrawals from suspended savings banks, prosecutors are zeroing in on about 5 billion won ($4.68 million) taken out by 22 account holders at Busan Savings Banks on the eve of the suspension of operations.
The prosecution plans to call in the customers who took out 5 billion won one day before the nation’s largest secondary lender was ordered to halt operations on Feb. 17 by the Financial Services Commission (FSC) and check if there is any link between the bank’s executives or employees with the account holders.
The probe started after up to 14.2 billion won was found to have been withdrawn from Daejeon Mutual Savings Bank and Busan Savings Bank in after-business hours a day before their suspensions.
This prompted suspicions that employees of the banks told their family members and friends to withdraw their deposits before their businesses were stopped.
Prosecutors believe that 5 billion won out of the total withdrawals at the Busan-based bank was drawn out on bank employees’ and major shareholders’ tip-offs and they will punish those who were paid in return for notifying of the scheduled shutdown.
In addition, the prosecution is investigating into who leaked the inside information of the scheduled suspensions. Anyone from the financial regulator involved in the case will face a charge of revealing classified information.
Along with the investigation by the prosecution, the financial authorities’ decision to attempt to retrieve the deposits that were improperly withdrawn is under legal review.
The decision came after President Lee Myung-bak ordered a thorough inquiry last week into the illegal withdrawals, calling it a “serious moral hazard.”
Just after the President’s remarks, FSC Chairman Kim Seok-dong said the regulator will mull over seizing illegally withdrawn deposits, but added that the issue would be subject to legal review.
“The FSC will comprehensively examine whether other suspended savings banks were involved in similar unlawful practices,” he said.
“If the allegations prove true, the employees may have their breached professional duties and violated financial laws banning transactions under others names.”
Separately, the FSC is looking into five other savings banks to see if there were any illegal withdrawals.
As savings banks have been hit hard by the growth of soured large property-linked loans due to the global financial crisis in 2008, the FSC halted the business of eight ailing savings banks earlier this year due to weak capital strength and liquidity crunches.
One was sold to Woori Financial Group in March and the remaining seven will be auctioned off with the FSC planning to pick preferred bidders in June.