By Lee Hyo-sik
The prosecution has resumed an investigation into allegations that Shinhan Financial Group Chairman Ra Eung-chan violated the nation’s real-name account rules by managing multiple borrowed-name bank accounts and transferring tens of billions of won to a now-jailed businessman.
It is also looking into whether Ra embezzled part of 1.56 billion won paid by Shinhan Financial to group honorary chairman Lee Hee-kun as an advisory fee over the years.
One day after a group of civic organizations filed a complaint against Ra, who has been embroiled in an internal power struggle with his once key lieutenant Shin Sang-hoon, on charges of masterminding irregular financial transactions, the Seoul Central District Prosecutors’ Office said Wednesday that investigators have begun looking into the case.
The chairman was suspected of breaking the real-name account regulations last year by transferring 5 billion won to Park Yeon-cha, a Busan-based businessman and supporter of the late former President Roh Moo-hyun, through several bank accounts opened under borrowed names in 2007.
But following Roh’s suicide in May 2009, prosecutors ended the probe into Ra.
“After receiving a complaint from civic groups against Chairman Ra, we have decided to assign the case to the investigative unit, which is currently looking into Shinhan Financial Group CEO Shin’s alleged embezzlement and breach of trust, because the two incidents are related,” an official from the prosecution office said.
Early this month, Shinhan Bank filed a complaint against Shin, alleging that he embezzled 1.5 billion won and arrange inappropriate loans for his relatives.
At a board of directors’ meeting Tuesday, Shin was suspended from duty until the prosecution completes its probe as the 12-member board voted 10-1 for his suspension.
Who will become the final winner in the infighting now depends on the result of the investigation by the prosecution.
The prosecution official also said investigators will probe the allegations raised by Shin against Ra.
Shin has been accusing Ra and Shinhan Bank CEO Lee Baek-soon of embezzling large portions of advisory fees paid to group honorary chairman Lee.
Separately, Financial Supervisory Service Governor Kim Jong-chang said on Sept. 7 that the regulators have launched an inquiry into Ra, saying a number of its investigators are looking into the allegations.
Ra was appointed as the chairman in March for the fourth time. The 72-year-old is the longest-serving chief executive in the country’s financial sector, running Shinhan Bank from 1991-1999 and Shinhan Financial since 2001.
A violation of the real-name transaction rule is punishable by up to five years in jail or a maximum fine of 30 million won. An individual who receives fines or heavier penalties for the violation of financial rules cannot be appointed as a financial company executive.