1 week Ago By Lee Jun-sung
Son Tae-seung, who became the president of Woori Bank in 2017, also served as the chairman of Woori Financial Group from January 2019 until his retirement in March last year, leading the major financial institution for six years. According to the Financial Supervisory Service, from April 2020 to early this year, Woori Bank extended loans totaling 61.6 billion won over 20 companies and 42 transactions to relatives of former Chairman Son.
More than half of these deals, 28 transactions totaling 35 billion won, were deemed as preferential and improper loans. It was found that over half of these loans did not follow standard criteria or procedures during the evaluation or post-management processes. Documents were not verified for 28 transactions, accounting for 57% of the loans, or 35 billion won.
Furthermore, collateral and guarantee statuses were inadequate, and there was a lack of proper checks on the use of the loan funds, violating loan screening procedures overall. As a result, a significant portion of these loans turned non-performing. As of August, the amount in default for one to three months or identified as non-performing for over three months reached a staggering 19.
8 billion won. In response, the prosecution launched a full-scale investigation and on October 15 indicted Lim, a former Woori Bank head, on charges of breach of trust and bribery under the Act on the Aggravated Punishment of Specific Economic Crimes. Lim is accused of engaging in improper loans while building a relationship with Kim, Son's brother-in-law, during his tenure at the Shin-dorim and Seonreung Financial Centers.
Kim, Son’s brother-in-law and a central figure in the controversy, was also indicted on charges of embezzlement under the same economic crimes law on September 24. The prosecution also investigated the possible creation of slush funds by Son and his relatives. On October 14, they summoned a staff member from Kim's company as a reference and questioned the employment favors within Woori Financial.
Prior to this, on October 11, the prosecution searched Son’s residence and related offices. Earlier, on August 27 and 28, they conducted raids on Woori Bank's headquarters and on October 11 carried out a forced investigation on nine locations including the offices and residences of former and current related persons. Rim Jong-yong, the chairman of Woori Financial Group, mentioned the “responsibility theory” due to the improper loans related to the former chairman’s relatives during a National Assembly audit on October 10.
Woori Bank originally emerged from the merger of two major banks, Commercial Bank and Hanil Bank. Son Tae-seung is from Hanil Bank, and it was confirmed that executives and employees from Hanil Bank were directly and indirectly involved in the improper loans to Son’s relatives. Even post-merger, employees from the two banks reportedly formed factions, causing internal friction over personnel and management issues.
Lee Bok-hyun, head of the Financial Supervisory Service, recently emphasized that accepting factionalism within Woori Financial could weaken internal controls. Kim Hyun-jung, a lawmaker from the Democratic Party, remarked during a recent parliamentary inspection that, due to the unique factional culture, internal controls at Woori Financial are not functioning properly, with issues continually arising since the merger of different companies. Lee Hyun-seung, a lawmaker from the People Power Party, pointed out that the improper loan incident regarding Son’s relatives first came to light through an insider’s tip, and despite negative opinions on the loans from responsible employees, they were executed due to higher-level influence, raising concerns about the pervasive power of internal factions.
Following the scandal, Woori Financial dismissed eight employees, including the involved director, and conducted an internal audit on all loans related to Son’s relatives between May and June, which was seen as a disciplinary action. However, there has been criticism that this was merely an attempt to deflect blame. Woori Bank often experiences turmoil due to weak internal controls.
In June last year, it was revealed that a deputy manager at a Woori Bank center embezzled approximately 10 billion won by falsifying corporate client documents. At the time, the prosecution noted that "in the absence of the branch manager, staff completed approvals, transferred loan funds to the branch instead of the client's account, with no tracking or oversight." In October, it was also reported that a B branch failed to detect false documents related to a loan for the sale of residential officetels by a developer, resulting in a 5.
5 billion won loan..
