NH NongHyup Bank plagued by irregularities

National Agricultural Cooperative Federation Chairman Kang Ho-dong speaks during a parliamentary audit at the National Assembly in Seoul, Oct 18. Yonhap By Lee Kyung-min NH NongHyup Bank is under police investigation over a fraudulent loan granted to a borrower that used falsified documents, according to market watchers. This is the latest development in the continued cases of employee misconduct and questionable business practices of the country’s top five commercial lenders.

The bank subsidiary of NongHyup Financial Group said Friday in a public disclosure that a customer committed fraud involving 1.5 billion won ($1.1 million) at one of its branches in Seoul.



Friday’s disclosure followed a notice of an ongoing police investigation into real estate fraud. The lender has since identified the transactions in question in an internal audit. This came on the heels of Thursday’s incident where it was revealed that a bank employee at a branch in Ulsan had embezzled a combined 250 million won from a customer in his 70s since July.

The bank became aware of this case after the customer’s family made a complaint about the decreasing balance of his bank account. Early this month, the bank said one of its real estate loans, worth 14 billion won, was referred for police investigation. These cases are among the slew of irregularities reported at NH NongHyup Bank.

Rep. Cheon Jun-ho of the main opposition Democratic Party of Korea said a total of 10 cases of irregularities occurred at the bank from January to August. With the aforementioned three, the total number of cases now adds up to 13.

Under the law, banks are not required to report irregularities under 300 million won to the Financial Supervisory Service. Irregularities under 1 billion won also do not require a public disclosure. Yet, the pattern of irregularities continues despite the apology of National Agricultural Cooperative Federation Chairman Kang Ho-dong on Oct.

18. He announced plans to implement a medium- to long-term growth strategy for responsible management during an Agriculture, Food, Rural Affairs, Oceans, and Fisheries Committee audit at the National Assembly in Seoul. Kang said the central governing body of the bank will deny financial support for subsidiaries involved in questionable practices, in a bid to regain the lost trust of the public.

According to Rep. Lee Yang-soo of the ruling People Power Party, 81 percent of the irregularities reported over the last five years exceeding 1 billion won at NH NongHyup Bank occurred this year. Meanwhile, Woori Bank extended 35 billion won in improperly granted loans to the relative of former Woori Financial Group Chairman Son Tae-seung.

Several bank employees have also embezzled a combined total of tens of billions of won over the past few years. Prosecutors searched Son's home and a former high-level Woori Bank official was indicted in detention. Prosecutors say the official expedited the loan approval process for Son's relative.

He faces charges of bribery..