DGB Daegu Bank’s headquarters in Daegu, about 240 kilometers southeast of Seoul, on July 6, 2023. (Yonhap)
SEOUL, Aug. 11 (Korea Bizwire) — South Korean banking sector has become entangled in a series of massive corruption scandals, revealing serious weaknesses in its internal control systems.
The Financial Supervisory Service (FSS) on Wednesday launched an emergency investigation after receiving allegations that employees of DGB Daegu Bank, located in the southeastern city of Daegu, had forged customer documents to open securities accounts.
In their pursuit of sales targets for new securities accounts, certain employees urged customers to open these accounts.
Subsequently, they duplicated the application forms filled out by customers, resulting in the opening of additional accounts with other securities firms.
Furthermore, the Seoul Central District Prosecutors’ Office is currently investigating an executive-level employee from another local bank, BNK Kyongnam Bank.
The employee is alleged to have embezzled and misappropriated 56.2 billion won (US$42.5 million) in repayment funds for real estate project financing over the past 15 years.
While employing typical embezzlement tactics such as transferring loan repayment amounts to family accounts and forging loan documents, the bank’s internal control system failed to detect such activities.
Meanwhile, a number of employees from KB Kookmin Bank, a major South Korean lender, managed to secure unfair profits of about 10 billion won by utilizing undisclosed information about listed companies.
M. H. Lee (mhlee@koreabizwire.com)
