FSS "Full Investigation into Savings Bank PF Embezzlement Incident"

Hantoo, KB and Others Face Consecutive Embezzlement Incidents in Savings Bank PF Loans

[Asia Economy Reporter Minwoo Lee] Recently, as a series of embezzlement incidents related to project financing (PF) loans have occurred at savings banks, the Financial Supervisory Service (FSS) has launched a comprehensive investigation of savings banks.

On the 8th, the FSS announced that it instructed savings banks to conduct self-inspections and report on the repeated embezzlement incidents in PF loan cases. Although the supervisory authority has previously conducted comprehensive investigations into the soundness of PF loans at savings banks, this is the first time a full-scale investigation related to embezzlement has been carried out.

Recently, it was revealed that an employee in charge of PF loans at Korea Investment Savings Bank, the second largest in the industry, embezzled about 800 million won. Last year, multiple embezzlement incidents occurred at KB Savings Bank (9.4 billion won), Moa Savings Bank (5.9 billion won), Pepper Savings Bank (300 million won), and OK Savings Bank (200 million won).

The FSS believes that PF loans are more vulnerable to embezzlement because they are executed in multiple installments according to the progress rate of the project site. An FSS official stated, "We instructed that the internal control processes be thoroughly checked through an independent audit organization rather than the sales organization," and added, "The report is expected to be completed within this month."