[Woori Bank Embezzlement] "This Time It's Over"... All Financial Sectors on High Alert

Our Bank Branch Manager Cracks Down on Staff
Other Banks Also Inspect Internal Control Systems
Second-Tier Financial Institutions Worried About Spillover Effects

[Image source=Yonhap News]

[Asia Economy Reporter Song Seung-seop] The entire financial sector is on high alert following a recent embezzlement incident revealed at Woori Bank. The criticism is intense, and with high public interest, the head of the financial authorities has personally announced strict inspections and disciplinary actions.

According to the financial sector on the 10th, at Woori Bank's Branch A, employees recently received an email containing the bank's internal control regulation file along with a message demanding strict compliance.

The sender was the branch manager, stating that an embezzlement incident had occurred within the company and urging caution at the branch to prevent any untoward incidents for the time being.

This sense of crisis is stronger in branches with lower internal control ratings within Woori Bank. Woori Bank implements its own internal control rating system. If a certain level is not achieved, there are disadvantages in incentives such as bonuses. Moreover, branch managers and center heads, who are frontline responsible persons, find it difficult to avoid responsibility if an incident occurs. Branch A was also evaluated as having insufficient internal control rating at Woori Bank.

The situation is similar at other banks. KB Kookmin Bank recently conducted a comprehensive self-inspection of its internal control system. On the 3rd, ahead of a meeting with the Financial Supervisory Service (FSS) Governor at the Bankers’ Hall in Jung-gu, Seoul, KB Kookmin Bank President Lee Jae-geun said, "On the day of the Woori Bank embezzlement incident, we checked internal controls," adding, "We took time to check again to raise awareness within the organization."

The FSS instructed all banks to conduct a self-inspection of their overall internal controls before the meeting. FSS Governor Jeong Eun-bo warned, "The large-scale financial accident at Woori Bank is a very serious matter that undermines trust in the banking sector," and stated, "We will thoroughly investigate the facts and hold those responsible strictly accountable once identified."

Smaller financial institutions in the secondary financial sector, which have smaller asset sizes than commercial banks, are also conducting self-inspections of internal controls. Due to frequent financial accidents in the secondary financial sector, there are concerns that this year's FSS inspections may be very strict and rigorous. A representative from a savings bank explained, "The audit team re-examined the internal control system and clarified regulations and departmental guidelines," adding, "You could say we have internally enhanced it further."

Meanwhile, at Woori Bank, it was revealed that employee A from the Corporate Improvement Department embezzled 61.4 billion KRW of company funds over six years in three separate instances starting from 2012. This amount was supposed to be returned to the Iranian company Entekhab. A, along with his younger brother B and accomplice C, have been detained.

This content was produced with the assistance of AI translation services.