FSS: "Final Persons Responsible for Embezzlement Incident Are Bank President and Chairman"... Is the Authorities' Responsibility "Regrettable"?

Financial Supervisory Service Announces Results of Woori Bank Embezzlement Incident
"Regulatory Review Needed" to Determine Scope of Sanctions
On FSS Accountability, Only States "There Are Limits"

Lee Junsu, Deputy Director of Banking and Small Business Finance at the Financial Supervisory Service

[Asia Economy Reporter Song Seung-seop] The Financial Supervisory Service (FSS) pointed to individual deviation and internal control system failures as the causes of the embezzlement incident at Woori Bank, while avoiding responsibility for the financial authorities themselves. Despite numerous inspections during the embezzlement period, the FSS stated that there were limitations in detecting the embezzlement, making it unavoidable. On the other hand, the FSS identified the "CEO and Chairman" as the final parties related to the Woori Bank embezzlement incident.

On the 26th, Lee Joon-soo, Deputy Director of the Banking and Small and Medium Enterprise Finance Division, held a press briefing at the FSS press room in Yeongdeungpo-gu, Seoul, to announce the results of the Woori Bank embezzlement incident and conducted a Q&A session with reporters, stating, “We regret that the FSS did not detect the embezzlement.” Through this briefing, it was revealed that Jeon, an employee of Woori Bank’s Corporate Improvement Department, embezzled about 70 billion KRW of company funds over eight years starting from 2012, along with details of the methods used.

When asked whether the FSS bears responsibility for failing to detect the embezzlement, Deputy Director Lee explained, “FSS inspections basically focus on systems and governance structures,” adding, “When individual cases or incidents occur, we focus specifically on those areas.” He further stated, “If there is no information or incident, we look at the overall system, so there are limitations in identifying if something is wrong.”

In the financial sector, there was much criticism that the FSS, which conducted as many as 11 inspections during the Woori Bank embezzlement incident, failed to uncover the criminal facts. In response, former FSS Governor Jung Eun-bo met with reporters and said, “We need to verify the facts,” while also stating, “I believe that anyone responsible should be held accountable.”

It is understood that the FSS also conducted an internal review. They examined the methods and areas of inspections at the time but concluded there was no part to be held accountable for. Deputy Director Lee said, “We think so ourselves, but since there was an audit by the Board of Audit and Inspection, I believe an accurate evaluation will come from a third-party perspective.”

When asked how far the responsibility for the embezzlement incident could be extended to the CEO and others, he refrained from commenting, saying, “It is difficult to say at this point.” However, he added, “The parties involved in the incident include the team leader directly in the line, the executive level above them, and ultimately the CEO and Chairman,” and said, “There needs to be a review of which laws and regulations apply.”

Regarding where the funds were used, he said, “It seems it will be revealed during the prosecution’s investigation,” adding, “From the necessary fund tracing during the investigation, about two-thirds appear to have flowed into the embezzler’s younger brother’s securities account.” He also mentioned, “Most of it was used for stocks or futures options,” and “The rest is presumed to have been used for relatives’ businesses.”

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