Financial Supervisory Service and Woori Financial in DLF Trial Engage in Tense Exchange over Woori Bank Embezzlement Incident

Defendant "Embezzlement Incident Shows Woori Bank's Internal Control Issues"
Plaintiff "Inappropriate to Mention When Not a Reason for Disposition"

Seoul High Court / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Song Seung-seop] A tense exchange occurred over the 60 billion KRW embezzlement incident at Woori Bank during the second trial of the derivative-linked fund (DLF) case between the Financial Supervisory Service (FSS) and Sohn Tae-seung, Chairman of Woori Financial Group. Since the trial itself deals with internal controls, this is interpreted as a strategy by the attorneys to gain an advantageous position in court.

At the related trial held on the 13th at the Seoul High Court, lawyers from both sides clashed in court, discussing the recent 61.4 billion KRW embezzlement incident at Woori Bank. This trial began after the FSS issued a disciplinary warning to Chairman Sohn, holding him largely responsible for the incomplete sales of Woori Bank’s DLF. Chairman Sohn filed a lawsuit seeking to cancel the disciplinary action and won in the first trial.

During the defense, the FSS mentioned an incident where an employee A from Woori Bank’s Corporate Improvement Department embezzled 61.4 billion KRW of company funds. The FSS lawyer criticized, “An incident occurred where Woori Bank failed to detect the 61.4 billion KRW embezzlement,” adding, “This shows that Woori Bank neither established general internal control standards nor complied with them.” They further argued, “In conclusion, all disciplinary actions regarding the (DLF) case were based on regulatory grounds and the damage is enormous, so the plaintiff’s demands should be dismissed.”

Chairman Sohn’s side strongly opposed these claims. His lawyer rebutted, “The FSS is bringing up a 60 billion KRW embezzlement case unrelated to this matter,” and “The investigation is ongoing and the circumstances have not been confirmed.” They continued, “Based on what has been revealed so far, internal control standards were not violated and the scope of work is entirely different,” pointing out, “The basic facts are different and it is highly inappropriate to mention this as a reason for disciplinary action.”

The dispute over the Woori Bank embezzlement incident in the DLF trial arises because internal control is the core issue in both cases. Chairman Sohn and the FSS are contesting whether internal control standards were properly established at the time of the incomplete sales of the DLF and whether the bank president can be disciplined due to operational issues in internal control. Regarding the embezzlement incident, criticism has emerged that Woori Bank failed to detect a crime involving document forgery for 10 years, indicating problems with internal control.

‘Legal Battle’ Also Over Hana Bank Ruling

They also clashed over the ruling on March 14 at the Seoul Administrative Court, where Chairman Ham Young-joo of Hana Financial Group lost. Chairman Ham also faced disciplinary action for responsibility in the incomplete sales of DLF and entered litigation but, unlike Chairman Sohn, lost in the first trial. Although the cases are similar, the rulings were completely opposite, making this a key issue from the second trial in April.

The FSS lawyer cited, “The Hana Bank ruling also recognized the Hana Bank president as the ultimate person responsible for internal control,” adding, “The total responsibility lies with the company’s representative, and even if the content is prepared by the operational department, the final enactment is deliberated and resolved by the board of directors.” Since Hana Bank’s president was recognized as having the duty to establish internal controls, the implication is that Woori Bank’s president should also be held responsible.

On the other hand, Chairman Sohn’s lawyer said, “There are serious errors I want to point out,” and criticized, “The Hana Bank ruling is based on the idea that the company could predict financial accidents, even if not directly stipulated by law.” The lawyer’s position is that the Hana Bank ruling, which was based on abstract provisions in enforcement ordinances rather than laws, is unfair.

Both the FSS and Chairman Sohn’s lawyers plan to submit any rebuttals or additional materials to the court before the verdict date. The verdict is scheduled for July 8.

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