The Korea Herald


Ex-financial regulator indicted over Busan bank

By Korea Herald

Published : Nov. 2, 2011 - 15:41

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Prosecution wraps up probe into Busan savings bank scandal, indicting 76

Prosecutors have indicted Kim Jong-chang, a former top financial regulator, for the breach of an ethics law, wrapping up its probe into a failed savings bank in Busan.

“A total of 76 have been indicted in connection with our investigation into Busan Mutual Savings Bank, whose financial corruption amounts to 9 trillion won,” Choi Jae-kyung, an official at the Supreme Public Prosecutors’ Office told a press briefing. Of them, 20 are former and current executives of the bank, including its chairman Park Yeon-ho and vice chairman Kim Yang.

According to Choi, Kim, former governor of the Financial Supervisory Service, is charged with hiding his ownership of an equity stake in a firm which invested in the ailing lender by transferring the shares under the names of his wife and an acquaintance.

The FSS is the nation’s top financial regulatory body that examines and supervises savings banks and other financial institutions. Last February, it suspended Busan and other savings banks, citing severe capital shortages.

Investigators said they found no evidence to believe that Kim used his influence to help the ailing bank.

The investigators found that Busan bank engaged in illegal lending and ran an illegal lobbying scheme targeting influential people in the government, financial industry and political circles in order to help the bank escape sanctions from the financial regulator.

Among them are Eun Jin-soo, a former commissioner of the Board of Audit and Inspection, Kim Gwang-soo, chief of the Korea Financial Intelligence Unit and Seo Gap-won, a former lawmaker of the opposition Democratic Party.

Some of President Lee Myung-bak’s confidants were also accused of being involved. They are Kim Doo-woo, a former senior presidential spokesman and Kim Hae-soo, a former presidential secretary for political affairs.

Prosecutors also indicted Chang In-whan, CEO of KTB Asset Management, on allegations that his firm, which handled the lender’s rights issue, provided false information to investors to embellish the bank’s finances. 

By Lee Sun-young