[Exclusive] Woori Bank's Embezzlement Incident, First Measure is Strengthening 'Ordered Leave'

[Image source=Yonhap News]

[Asia Economy Reporter Song Seung-seop] Woori Bank, where an embezzlement incident involving approximately 60 billion KRW occurred, will significantly expand the scope of duties subject to mandatory leave. The implementation and verification of mandatory leave are also expected to become stricter. This is the first time a kind of countermeasure has been introduced since the incident. Although a fact-finding investigation is underway, due to the seriousness of the matter, swift measures have been prepared.

According to the financial sector on the 20th, Woori Bank will first actively review whether there are any additional duties that should be included in mandatory leave by evaluating their importance and risk at all branches and headquarters departments. If the reported duties pass the review and are incorporated into the system, the employees responsible for those duties will be required to take mandatory leave in the future.

The mandatory leave system is a procedure where financial companies send employees on sudden leave. Afterwards, the past work history of the employee is audited. It is usually applied to those handling cash or physical assets. Banks designate employees responsible for trading, derivative transactions, and cash handling as subjects of mandatory leave and issue mandatory leave periodically.

Woori Bank operates mandatory leave by duty rather than by employee. Even if the department or work location differs, if the duty is subject to mandatory leave, the related personnel must take mandatory leave. Due to the nature of the financial industry, many duties span multiple departments, making it difficult to single out employees from a specific department to send on mandatory leave. The department head, such as the branch manager, takes charge of implementing it, and the Compliance Office conducts a secondary verification to ensure proper execution.

Corporate Improvement Department Duties, Previously Excluded, Likely to Be Included

As a result of this measure, duties of the Corporate Improvement Department, where the embezzlement incident occurred, are expected to be subject to mandatory leave. Until now, many duties of the Corporate Improvement Department were excluded from mandatory leave. This led to criticism that despite Deputy Manager A embezzling 61.4 billion KRW of company funds, it went unnoticed for over ten years. When mandatory leave is taken, the employee’s financial transaction history, work-related computer devices, and office equipment can be thoroughly examined.

The implementation and verification of mandatory leave are also expected to become stricter. Previously, in the banking sector, mandatory leave was often used merely for formality. The reason was that sudden mandatory leave could disrupt work. Consequently, some banks tipped off subordinates about the dates of mandatory leave to adjust work schedules or overlapped mandatory leave with summer vacations or training sessions.

However, with consecutive embezzlement incidents in the banking sector and financial authorities demanding stronger internal controls, the situation is changing. On the 18th, after the 2022 Financial Supervisory Advisory Committee plenary meeting at the Bankers Hall in Jung-gu, Seoul, Jeong Eun-bo, Governor of the Financial Supervisory Service, said regarding the Woori Bank embezzlement incident, "We will focus more on internal control issues and concentrate efforts on improving the system as a supervisory authority." Since mandatory leave is also subject to inspection by supervisory authorities, it must be thoroughly implemented.

Currently, the Financial Supervisory Service is conducting unscheduled inspections at Woori Bank to investigate the embezzlement incident.