FSS: "Gyeongnam Bank Employee Embezzlement Amounts to 298.8 Billion Won... Lack of Internal Controls" (Update)

The Financial Supervisory Service (FSS) announced on the 20th that the amount involved in the project financing (PF) loan embezzlement incident at Gyeongnam Bank recently reached 298.8 billion KRW.

The FSS explained that it confirmed this fact as a result of an emergency on-site inspection conducted since July 21. The FSS stated that the cause of this large-scale embezzlement incident was the failure of the internal control functions for preventing financial accidents at BNK Financial Group and Gyeongnam Bank to operate properly.

According to the FSS, the perpetrator, who had been in charge of PF loan operations in the Investment Finance Department for 15 years, embezzled a total of 298.8 billion KRW from 17 PF projects under his management from May 2009 to July 2022.

The FSS viewed that BNK Financial Group’s inadequate risk management and operational status inspections of its subsidiaries, as well as the failure of internal control oversight functions over Gyeongnam Bank, were the causes of the incident. Although BNK Financial Group conducted written inspections related to internal controls at Gyeongnam Bank, it had never conducted inspections on the handling and management of high-risk PF loans since Gyeongnam Bank was incorporated into the holding company. Furthermore, it was confirmed that the holding company’s own inspections of Gyeongnam Bank had no track record of accident prevention inspections at the head office beyond physical inspections.

An FSS official stated, "We plan to strictly take measures against the perpetrator and related executives and employees who committed illegal or improper acts based on relevant laws and procedures after further verifying the use of the embezzled funds. Once the on-site inspection of this embezzlement incident is completed, we will actively cooperate with investigative authorities by sharing related information to clarify the facts."

BNK Gyeongnam Bank. Photo by Jinhyung Kang aymsdream@

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