Financial Services Commission: "We Knew About Ostem Implant Embezzlement and Disclosure Report"

Ostem Implant Headquarters, Gangseo-gu, Seoul. Photo by Yonhap News

[Asia Economy Reporter Moon Hyewon] On the 18th, it was confirmed that the financial authorities only became aware of the fact that more than 90% of the assets at Osstem Implant were embezzled after seeing the disclosure report.

According to Yoon Joo-kyung, a member of the People Power Party, on the 18th, the Financial Services Commission reported in a response submitted to Yoon's office that "we recognized the occurrence of the embezzlement incident upon Osstem Implant's disclosure of the incident on the 3rd of this month."

The FSC further stated, "We have been monitoring the ripple effects this incident may have on the financial market and investors," and answered Yoon that "the exchange implemented a trading suspension measure from 8:35 a.m. on the day of the disclosure due to the occurrence of a reason for substantive review of listing eligibility."

However, the FSC refused to confirm whether the financial authorities had identified suspicious fund flows before the embezzlement incident disclosure and whether they had forwarded suspicious transaction information to investigative agencies.

In a response submitted to Kang Min-guk, a member of the same party's Political Affairs Committee, the FSC's Financial Intelligence Unit (FIU) stated, "It is difficult to provide information on whether suspicious transaction reports were filed or the number of reports regarding individual cases such as Osstem Implant due to confidentiality provisions under the Act on Reporting and Using Specified Financial Transaction Information."

Previously, in the 'Daejang-dong Development Corruption' case, the police disclosed to the press that they had received suspicious transaction details from the FIU, but the FIU refused to confirm whether it had notified investigative agencies even during last year's National Assembly audit.

An FIU official explained in principle, "Not all suspicious transaction reports received from financial companies are forwarded to investigative agencies; after reviewing and analyzing the suspicious transaction reports, if criminal suspicion is revealed, then the investigative agencies are notified."

Earlier, Osstem Implant disclosed that Team Leader Lee, whose full name is withheld, embezzled 188 billion KRW of company funds. Police investigations revealed that Lee had previously diverted company money and returned it, increasing the total embezzlement amount to 221.5 billion KRW. It is estimated that Lee incurred losses amounting to 75 billion KRW from stock investments made with the embezzled company funds.

Lee was arrested on the 5th and was sent to the prosecution on the 14th on charges of violation of the Act on the Aggravated Punishment of Specific Economic Crimes (embezzlement in the course of duty) and concealment of criminal proceeds.