[Reporter’s Notebook] The Rise of "Cow Thieves"... Time to Reexamine Financial Institutions' Organizational Culture

"Poor Bearings. That's why you have to manage people well."

This is a line left by the protagonist Nick Leeson to his wife as he fled after causing a massive financial scandal in the 1999 film Gamble (original title Rogue Trader). The movie is based on the real-life figure of the same name who caused the collapse of Barings Bank in 1995. It dryly reveals the psychology that emerges as Leeson transforms from a "needle thief" to a "cow thief" who bankrupts the bank. Leeson's personal desire to succeed, the company's performance-oriented culture and huge bonuses that encourage it, and the neglected internal controls lead him to ruin.

Recently, the domestic financial sector has been noisy due to the emergence of successive "cow thieves." Last year, an employee of Woori Bank caused an embezzlement incident involving 70 billion won, and recently, a manager-level employee at Gyeongnam Bank embezzled funds worth 56 billion won, shocking the industry. Even aside from large and small embezzlements, the financial sector has been struggling for years with various financial accidents such as incomplete sales.

The financial sector is busy preparing defenses by improving internal control systems and strengthening audit systems. A revision to the Financial Company Governance Act is also being prepared to hold financial company executives accountable when accidents occur. In fact, there are many holes in the internal control and audit systems of the domestic financial sector revealed in each incident.

However, there is skepticism about whether these accidents can be prevented solely by strengthening shields such as laws and systems. As numerous cases of "cow thieves," including Leeson, show, uncontrolled desire neutralizes any shield in some way. The lament of a government official, "Embezzling tens of millions or hundreds of millions of won from petty cash is serious, but it is worrying that the scale of incidents is growing day by day, perhaps due to a get-rich-quick mentality," does not sound trivial.

Therefore, urgent consideration is needed to improve organizational culture so that laws and systems (internal control systems) can be faithfully supported. Only when a culture is established where it is natural to observe professional ethics at the individual or organizational level, where compliance is as important as performance or personal bonuses, and where mutual checks and monitoring are freely practiced, can even the knives aimed at the shield be dulled.