Announcement of On-the-Spot Inspection Results for Woori Savings Bank and Capital on the 7th
Allegations of improper loans related to the relatives of the former chairman of Woori Financial Group are spreading to its affiliates. On the 7th, the Financial Supervisory Service (FSS) announced that, as a result of an unscheduled inspection of Woori Financial Group affiliates, Woori Savings Bank and Woori Financial Capital were found to have executed a total of 1.4 billion KRW in improper loans to companies related to former chairman Sohn Tae-seung's relatives.
According to the FSS, on January 31, Woori Savings Bank granted a 700 million KRW unsecured loan to a corporation where the spouse of the former chairman’s brother-in-law served as CEO. Evidence was found that employees who previously worked at Woori Bank were involved in the loan process, and it was confirmed that part of the loan funds were misappropriated for personal use.
In the case of Woori Financial Capital, on October 21, 2022, it handled a 700 million KRW real estate secured loan to another corporation where the former chairman’s father-in-law was CEO. It was also revealed that part of the loan funds were used for personal purposes. Moreover, despite the deterioration of the corporation’s credit rating and a decline in collateral market value during the maturity extension process last October, the maturity extension was approved without any measures to secure the loan.
The FSS believes that this issue expanded to the affiliates because Woori Bank and its management were aware of the improper loans related to the former chairman’s relatives but failed to take immediate action. In particular, the outdated organizational culture within the financial group, lax ethical awareness, and the failure of internal controls at the holding company level were identified as factors that hindered the prevention and early detection of the financial accident.
The FSS has reported the illegal suspicions, including the misappropriation of loan funds by the borrowers and related parties, to investigative authorities and has demanded strict internal disciplinary measures against the employees of Woori Savings Bank and Woori Financial Capital involved in the improper loan handling and maturity extension.
An FSS official stated, "We will closely examine issues such as organizational culture and ethical awareness at the financial group level and will guide and supervise to promptly improve and strengthen any deficiencies."
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