ED Dumfounding embezzlement

Woori Bank should make excruciating efforts to correct problems

It is dumbfounding that an employee of Woori Bank, one of the country's major commercial banks, was arrested for embezzling more than 61.4 billion won ($47 million). The case is all the more shocking in that it took place at the headquarters of the nation's fourth-largest lender despite the need for it to manage money securely. According to the bank and the police Thursday, the lender discovered the embezzlement through an internal inspection, and referred the case to the police for further investigation. The man, who has yet to be identified, turned himself in at Namdaemun Police Station in central Seoul.

The employee was found to have transferred 61.4 billion won to his own accounts over six years starting from 2012 while in charge of financial rescheduling of insolvent companies. The embezzled money is believed to be part of what Woori Bank confiscated from an Iranian home appliance maker following the breakdown of a merger deal involving the now-defunct Daewoo Electronics.

Police said they are confirming details regarding the use of the money, adding they suspect the employee may have spent a huge amount of money on stock investments. On Friday, police also arrested the employee's younger brother on charges of abetting. The recent case is far more sizable compared to most other embezzlement cases in the past ― 24.6 billion won concerning Keyang Electric Machinery and 11.5 billion won involving an official of Gangdong-gu Office. Only the Osstem Implant case involving 221 billion won earlier this year is larger.

These cases are serious as they show that our society is swayed by the trend of “money makes it all.” The recent case at the bank is far more serious and will likely have a far-flung impact since it involves a major first-tier lender. It is unbelievable that it took place at the bank's headquarters, rather than a branch, and went completely undetected for six years. This proves the bank has a serious defect in its internal control systems. The bank has been pursuing management with a focus on environmental, social and corporate governance (ESG) values. Yet, the recent case has tarnished those efforts.

Woori Bank cannot avoid criticism for having failed to adopt a cross-check system of handling money strictly, delegating money management to the relevant employee. This shows the bank has failed to take even the basic steps needed for tight money management. Now the bank should thoroughly review the problems and make excruciating efforts to prevent such bungling from occurring again. If not, the bank may face a serious setback as its clients may turn their back on it.

Though Korea has been regarded as an advanced economy, its financial sector has a long way to go. Now is the time for local banks to adopt advanced financial systems by, for instance, diversifying their business models, beyond seeking profits from interest only.

It is not enough to punish only the employee. The executive members including CEO and relevant officials of the Financial Supervisory Service should take due responsibility for the case. Financial authorities and the nation's other commercial banks should take appropriate measures to protect themselves from similar humiliating embezzlement cases.