Two Lotte Card Employees Accused of Embezzlement Involving Over 10 Billion Won... Financial Supervisory Service Reports to Prosecutors

Secret Contracts with Partners... Two Employees Pocket 6.6 Billion Won
Financial Supervisory Service Conducts Full Investigation of Card Companies

It was uncovered that Lotte Card employees colluded with a partner company to enter into a poorly managed partnership contract worth 10.5 billion KRW and embezzled 6.6 billion KRW.

The Financial Supervisory Service (FSS) recently conducted an on-site inspection regarding allegations of breach of duty by Lotte Card employees and announced on the 29th that on the 14th, two Lotte Card employees and the representative of the partner company were reported to the prosecution.

According to the FSS investigation, two employees from Lotte Card’s marketing team conspired with the partner company to sign a defective partnership contract and paid 10.5 billion KRW. These marketing team employees embezzled 6.6 billion KRW of the 10.5 billion KRW through paper companies and family-owned firms, using the funds for real estate development investments, automobile and gift certificate purchases, among other expenses.

Lotte Card’s internal controls were also inadequate. The marketing team leader and a team member colluded with the partner company’s representative to sign a contract assigning card product promotions. Despite unclear contract terms and no means to verify performance, Lotte Card entered into an unusual contract structure that prepaid a fixed amount of 16,000 KRW per card issuance member. Through this, the company paid 10.5 billion KRW to the partner from October 2020 to May this year.

Card partnership services are generally operated directly by the card company’s sales department, but in this case, Lotte Card outsourced the partnership services entirely to an external company. Although there was a department responsible for the bidding process, the problematic marketing team was entrusted with it. It was also revealed that the bidding briefing session was skipped and the bidding conditions and evaluators were arbitrarily selected.

Meanwhile, aside from the 6.6 billion KRW taken by the Lotte Card employees, the remaining 3.9 billion KRW was reportedly taken by the partner company’s representative. The FSS believes that the funds used by the partner company to fulfill the promotion contract were only a portion of the total, and the usage will be revealed through the prosecution’s investigation.

The FSS reported the two card company employees and the partner company representative to the prosecution on charges of violation of the Act on the Aggravated Punishment of Specific Economic Crimes (breach of duty) and instructed strict disciplinary actions against executives and employees responsible for the internal control failures.

An FSS official stated, "Furthermore, the FSS has ordered the card company to review its overall internal control system, establish and implement improvement measures for vulnerabilities, and required all card companies to conduct self-inspections to check for similar cases and report the results." The official emphasized, "We will continue to respond firmly and strictly to financial accidents related to internal controls to prevent recurrence of similar cases."

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