Prosecutors Indict Current and Former IBK Employees Over 80 Billion Won in Illegal Loans

Illegal Loans Totaling 88.2 Billion Won: Branch Managers Colluded for Unlawful Lending
Received Tens of Millions of Won as 'Salaries' from Borrower Companies

Current and former officials of Industrial Bank of Korea (IBK), suspected of involvement in illegal loans worth tens of billions of won, have been brought to trial.

On July 1, the Seoul Central District Prosecutors' Office Anti-Corruption Investigation Division 1 (Chief Prosecutor Lee Jundong) announced that it had indicted, without detention, seven people including former branch manager An, and had indicted two people including real estate development company CEO Kim, with detention, on charges including aggravated breach of trust and fraud under the Act on the Aggravated Punishment of Specific Economic Crimes.

IBK disclosed in January that an embezzlement incident involving 23.95 billion won had occurred. However, in March of this year, the Financial Supervisory Service announced that the amount of fraudulent loans and breach of trust was 88.2 billion won, more than three times the amount previously disclosed by IBK.

According to the prosecution, Kim, who is currently detained, and Jo, former head of IBK's Credit Review Center, are accused of conspiring with branch managers who joined the bank in the same year, to provide a total of 35 billion won in illegal loans to companies actually operated by Kim, through 21 separate transactions from January 2022 to November of last year.

Investigations revealed that Kim established multiple corporations under borrowed names and, through personal connections and bribery, colluded with Jo and other IBK employees in Seoul and Incheon to secure illegal loans and facilitate further loan arrangements, receiving large sums in return.

They are found to have used various corporations established under borrowed names and submitted false documents in order to circumvent lending restrictions, applying for and executing loans through illegal means.

Jo received a 20% stake in a real estate development company (valued at 60 million won) under his sister-in-law's name and 200 million won in cash from Kim in exchange for approving illegal loans. Additionally, Jo received a gold bracelet worth approximately 5 million won and a vehicle free of charge.

Furthermore, Jo is accused of appointing his sister-in-law as the CEO of a company that received loans, receiving a total of 90 million won under the pretense of salary, and using a corporate credit card for approximately 6 million won, all in return for approving illegal loans.

When IBK began its internal audit, the suspects fabricated false sales receipts to conceal golf entertainment expenses and created false shareholder registers to hide the transfer of shares, as confirmed by investigators.