[Current Status of Internal Control] ③ BNK and DGB Chairmen Likely to Be Summoned for National Assembly Audit... National Assembly to Hold CEOs Accountable

Ahead of the National Assembly Audit, CEO Witness Summons Demanded
Bill Holding CEO Accountable for Accidents Also Pending

A embezzlement incident involving real estate project financing loans worth approximately 56 billion KRW occurred at BNK Gyeongnam Bank. The photo shows a BNK Gyeongnam Bank branch in downtown Seoul on the 3rd. Photo by Jinhyung Kang aymsdream@

As a major embezzlement and other financial accidents occurred at banks, both ruling and opposition parties are demanding strengthened internal controls and penalties related to financial incidents ahead of the national audit. In particular, this year, it is expected that the chairpersons of financial holding companies will be summoned one after another as witnesses and reference witnesses for the national audit.

According to the National Assembly on the 21st, the 'general witnesses including companies' to be summoned for the National Assembly's Political Affairs Committee audit plan to hold a plenary session on the 25th to make a resolution. A Political Affairs Committee official said, "There are numerous requests for the attendance of the chairpersons of BNK Financial Group and DGB Financial Group as witnesses, and there has also been a request for the attendance of the KB Financial Group chairperson," adding, "There is a high possibility that requests for the attendance of other financial holding company chairpersons will also be made, and the final decision will be made on the 25th."

In the case of BNK Financial Group, the focus will be on the embezzlement of 298.8 billion won by an employee in charge of real estate project financing at Kyongnam Bank; for DGB Financial Group, the unauthorized opening of over 1,000 accounts by a Daegu Bank employee; and for KB Financial Group, the case where about ten employees of Kookmin Bank gained unfair profits of 13 billion won by using non-public information in the stock market.

[Image source=Yonhap News]

The Financial Services Commission's national audit is scheduled for the 11th of next month, and the Financial Supervisory Service's audit is set for the 17th. Financial public enterprises, including KDB Industrial Bank, are scheduled for the 24th of the same month, and a joint comprehensive audit of the Financial Services Commission and Financial Supervisory Service is set for the 27th.

A bill for internal control is also pending in the National Assembly. On the 11th, Representative Yoon Han-hong, the ruling party's secretary of the Political Affairs Committee, proposed the 'Financial Company Governance Act Amendment.' It includes provisions such as "If a financial company experiences organizational, long-term, and repeated widespread problems, the CEO must take responsibility for systemic failures" and "A 'responsibility structure chart' will be created for 20 to 30 key executives." The core is to predefine the internal control responsibilities of management to prevent any loopholes. This reflects the 'Financial Sector Internal Control System Improvement' plan announced by the Financial Services Commission in June.

Representative Yoon explained the bill, saying, "It also includes measures to strengthen the board of directors' supervision and role regarding internal control," adding, "Matters related to the establishment and supervision of internal control and risk management policies will be subject to board deliberation and resolution, and an internal control committee will be newly established as a subcommittee within the board." Since there is no disagreement between the ruling and opposition parties regarding the prevention of major bank accidents and internal control, discussions are expected to accelerate once the National Assembly is normalized.