[Viewpoint] Woori Bank Is Worse Than Tmef

Pursuing Private Gain Through Improper Loans by the Group Chairman
Worse Than Koo Young-bae's Business Investment Failure
Son Tae-seung and Lim Jong-ryong Must Also Appear Before the National Assembly

While both cases involve using customers' entrusted money as if it were their own, Son Tae-seung (former chairman of Woori Financial Group) is more culpable than Koo Young-bae (CEO of Qoo10 Group). Lim Jong-ryong (current chairman of Woori Financial Group) and Cho Byung-kyu (current president of Woori Bank), who distance themselves by saying "this is unrelated to me," are no different from Ryu Kwang-jin and Ryu Hwa-hyun, CEOs of Tmon and Wemakeprice, respectively. Therefore, just as the National Assembly summoned Koo Young-bae and two others, it should also call the three involved in the improper loans to relatives of the Woori Bank chairman for urgent hearings by the Political Affairs Committee.

There have been many analyses on why financial scandals such as embezzlement and breach of trust persist particularly at Woori Bank. Our diagnosis is closest to the core. When individual misconduct repeats, it points to a systemic problem. If changing or supplementing the system does not eradicate bad practices, then it is a matter of culture. People immersed in that culture cannot lead change. Although generally opposed to government intervention, it is necessary when required.

We are aware of voices both inside and outside Woori Bank pleading, "We are overhauling the system with a resolve to cut to the bone, so please trust us and wait." However, despite announcing internal control reforms two years ago, Woori Bank has failed to eliminate moral hazard. Financial Supervisory Service Governor Lee Bok-hyun’s assertion that "Woori Bank can no longer be trusted" is not an exaggeration.

Why is Woori Bank’s misconduct more egregious than that of Tmef (Tmon and Wemakeprice)? Both companies operate business models based on creating value with money temporarily entrusted by customers. The problem is not that Koo Young-bae used the money for investments or company operations. If the wrongdoing lies in failing to safeguard money that should have been paid to sellers but was temporarily held by his company, then that is a fault. However, at least Koo Young-bae did not touch customer funds for personal gain. Former Woori Financial Group chairman Son Tae-seung lent 61.6 billion won to relatives such as his brother-in-law’s family and nephew, of which 28 cases totaling 35 billion won were improper loans. According to Woori Bank, losses from delinquencies and defaults could range from 8.2 billion to as much as 15.8 billion won.

When the issue of Son Tae-seung’s improper loans surfaced, Lim Jong-ryong diagnosed in an internal meeting that "unjust orders and improper work practices are the causes." The "unjust orders" imply holding the predecessor Son Tae-seung responsible, while mentioning practices emphasizes that "these issues existed before I arrived."

In their rush to avoid responsibility, they sometimes fall into clumsy self-contradictions. Whether Lim Jong-ryong and Cho Byung-kyu should have reported Son Tae-seung’s improper loans to financial authorities is a matter for deciding their punishment. However, Woori Bank explained that since the issue was discovered through an internal audit, "negligence in screening is not a financial accident and thus not subject to reporting." Yet, when the Financial Supervisory Service publicized the case, the bank hurriedly filed a complaint with the police on charges of breach of trust. Breach of trust is a financial accident and must be reported.

They drew a line by saying that it was Koo Young-bae, not themselves, who decided where to invest customers’ money, but Ryu Kwang-jin and Ryu Hwa-hyun of Tmon and Wemakeprice, who recklessly discounted and distributed gift certificates to overcome cash shortages, have not reflected on their malicious and deceptive actions. How are Lim Jong-ryong and Cho Byung-kyu different from them?

The Woori Bank scandal cannot be said to have less direct or indirect impact on the national economy compared to Tmef. The Political Affairs Committee should urgently summon Son Tae-seung, Lim Jong-ryong, and Cho Byung-kyu for hearings. Witness appearances should also be pursued at the October National Assembly audit. Preparations should be made in advance to counter any tricks to avoid attendance by citing international events, as in previous years.