A financial scandal surrounding relatives of former Woori Financial Group Chairman Son Tae-seung is prompting calls that the top leadership at financial firms should be fully held accountable for lax regulatory control.
Implemented on July 3, a law on corporate governance of financial services companies has their leaders face liabilities if the firms are caught committing forgery, embezzlement or other financial crimes.
The law was introduced as such crimes have been rampant in the banking industry in recent years, inflicting losses on customers as a result.
In particular, the law requires the financial holding companies and their flagship banking arms to specify up to which ranks of officials will bear responsibility for the aforementioned crimes.
According to industry sources, the targeted companies deemed that presidents and CEOs should be exempted from facing punishment for crimes committed by employees, as they have bigger responsibilities.
“We believe such a lenient mood for the leaders is likely to change against them in the face of the scandal that rocked Woori Financial Group,” a public 한국을 relations official of a rival banking group said on condition of anonymity.
The official referred to Woori Bank being caught for providing 42 loans worth a total of 61.6 billion won ($45 million) to 20 companies that have connections with relatives of Son, who led Woori Financial Group from 2019 to early 2023.
The Financial Supervisory Service (FSS) said that 28 loans worth a total of 35 billion won were provided without the correct screening procedures or failed to meet the management guidelines.
The FSS plans to impose sanctions on the lender and refer the case to investigative authorities.
The bad loans are expected to bring losses worth somewhere between 8.2 billion won and 15.8 billion won.
Woori Bank apologized in a statement, saying it had taken disciplinary measures earlier this year, including the dismissal of over eight employees involved in the case.
“We will fully cooperate with the regulator and the investigative authorities,” the bank said.
Citizens’ Coalition for Economic Justice, a Seoul-based activist group, said the apology won’t be perceived as sincere if the top leaders of Woori Financial Group and Woori Bank can’t be held accountable for financial crimes in accordance with the related law.