The Financial Supervisory Service, after looking into alleged illegal business dealings by Woori Bank, will likely impose a sizeable penalty against the lender for opening hundreds of false-name accounts linked to CJ Group’s slush funds, sources close to the investigation said Tuesday.
The financial regulator launched last year a special investigation into the bank, which is the main creditor of CJ Group, to look into the allegation that the bank was involved in building up the conglomerate’s slush funds.
Concluding the yearlong probe into the allegation, the regulator recently confirmed the bank had opened several hundreds of borrowed-name accounts held by the country’s 14th-largest conglomerate, suspected of having created overseas slush funds to avoid paying taxes at home.
The investigation also found suspicious circumstances indicating the bank had failed to report suspicious fund transactions of CJ Group chairman Lee Jay-hyun, according to the sources.
The FSS will reportedly issue an institutional warning against Woori Bank and impose heavy penalties on dozens of the bank’s officials and employees at the penalty review committee meeting on Thursday.
On Thursday, the bank will also likely be slapped with another tough penalty for selling investment products without providing enough information about potential risks.
In a separate probe, the financial regulators were looking into the bank over the alleged mis-selling of investment products linked to a project to build a large trade center called Pi City in southern Seoul.
“We will review punitive actions against Woori Bank on Thursday for both the Pi City and borrowed-named account cases simultaneously,” said an official at the financial authority.
“The case of borrowed-name accounts involves serious issues, so we intend to impose heavy penalties on officials and employees.”
The news came as the government is looking to sell its controlling 30 percent stake, roughly $4.5 billion, in Woori Bank, part of Woori Finance Holdings, the country’s biggest financial firm.
The government hopes to sell its 57 percent stake in the bank to one entity by the first half of 2015, while the remaining 26.97 percent will be divided up and sold to various investors.
By Oh Kyu-wook and news reports