Banks Deceiving Customers and Embezzling Funds... Lee Bok-hyun: "Will Hold Legal Top Responsibility"

Direct Rebuttal to Involvement in KB Financial Group Chairman Election
"Principally, Only Prompt Public Discussion Without Political Consideration"

Financial Supervisory Service (FSS) Governor Lee Bok-hyun emphasized a strict response to the banking sector, where incidents such as embezzlement of 56.2 billion won at Gyeongnam Bank and illegal account openings without customer consent at Daegu Bank continue to occur. He stated that the highest legal responsibility will be imposed for accidents occurring in core banking operations whenever possible.

On the 10th, after attending the 'Business Agreement Ceremony for ESG (Environmental, Social Responsibility, Governance) Management of Small and Medium Enterprises' held at Hana Global Campus in Seo-gu, Incheon, Governor Lee said, "Managing customer funds during deposit and loan processes is the basic and core task of banks," adding, "We will hold not only the embezzler but also the managers and the bank accountable, especially if the bank identified the issue early but delayed reporting it to the authorities, imposing the highest responsibility allowed by law."

Earlier, the FSS announced on the 2nd that an employee in charge of real estate project financing (PF) at Gyeongnam Bank embezzled approximately 56.2 billion won over 15 years. Since 2007, this employee had been solely responsible for real estate PF tasks, but Gyeongnam Bank reportedly failed to implement job rotation or properly report the matter to the FSS. Additionally, at Daegu Bank, it was discovered that some employees forged over 1,000 customer documents without customer requests to open securities accounts in order to inflate performance.

However, Governor Lee refrained from commenting on whether the "highest responsibility allowed by law" would extend to top executives such as CEOs. He explained, "It is necessary to hold the highest responsible persons accountable for failures related to the essence of banking and securities businesses to the greatest extent possible. On the other hand, regarding ancillary banking tasks, I currently believe that more careful consideration is needed on whether top executives can be held responsible." He expressed concerns about excessive sanctions driven by populism.

As incidents in the banking sector have recently occurred one after another, there have been criticisms that the FSS was negligent in its inspections. In response, Governor Lee said, "The embezzlement at Gyeongnam Bank and others had been ongoing even before reflective considerations on improving internal controls in the financial sector emerged," adding, "Going forward, it is desirable to conduct thorough inspections and investigations, root out all issues at this point, and then establish new operations and practices."

He firmly denied allegations of interference in the selection of the KB Financial Group chairman. Recently, the FSS disclosed allegations that employees of KB Kookmin Bank purchased stocks in advance using undisclosed information. This led to criticism that the FSS indirectly interfered in the selection of the KB Financial Group chairman. Governor Lee stated, "I have no knowledge of the current KB Financial Group chairman’s retirement timing or the shortlist of chairman candidates, including undisclosed external figures," emphasizing, "The public disclosure of misconduct and corruption was made as soon as possible, and the timing and method were handled in principle without considering the resulting social or political repercussions."

[Image source=Yonhap News]