The Financial Supervisory Service is set to launch a special inquiry into Woori Bank next week as it received from the prosecution a list of hundreds of Woori accounts that CJ Group held under borrowed names.

The lender belongs to the state-invested Woori Financial Group, which was chided by the Board of Audit and Inspection on Thursday for its outgoing chairman’s abuse of authority, executives’ ethical lapses and lax management that led to low earnings.

The FSS said it has no plans to look into other banks as Woori Bank is CJ Group’s main bank. The prosecution asked the top financial regulator, however, to also scrutinize brokerages where CJ held accounts under borrowed names.

CJ Group is also suspected of holding about 10 borrowed-name accounts at Korean units of five foreign banks and securities firms, according to the prosecution. Prosecutors said Friday that they were tracing the financial accounts because the conglomerate was engaged in dubious transactions through foreign financial institutions.

The planned FSS inquiry is expected to reveal CJ Group’s violation of rules including the real-name financial transaction law.

Because CJ cannot open accounts under other people’s names on its own, Woori Bank staff are believed to have assisted in the process. Lack of internal supervision is another issue.

Woori had received an institutional warning from the FSS in February 2008 for violating the real-name transaction law in the Samsung Group’s slush fund scandal.

“Based on the information we received from the prosecution, we will take disciplinary measures on institutions or employees found at fault,” said an FSS official.

“Most of the wrongdoings have been proved through the prosecution’s probe, so we believe the special inquiry on Woori Bank won’t take long.”

The government had injected some 12.8 trillion won in public funds to bail out Woori in 2001, only to find it corrupt and loosely managed under chairman Lee Pal-seung, a close friend of former President Lee Myung-bak. The government hopes to sell its stakes in Woori as soon as possible.

The BAI’s inquiry into the lender revealed on Thursday that Woori Bank threw out over 70 billion won in performance-based bonuses despite falling short of its management targets and that Woori Financial chairman Lee abused power by appointing his friends as heads of affiliates.

The BAI accused the presidents of Woori affiliates Lee put in place of poor ethics, as they went on unnecessary overseas business trips to play golf and bought personal gifts using company money.

Chairman Lee spent 70 million won in company money to join the finance minister on the IMF annual congress in Tokyo last year and took five presidents of affiliates with him.

Only Lee and one of the presidents had any work-related items on their schedules during the trip. All six of them played golf on the last two days of the four-day trip.

Lee also spent 140 million won on trips with the presidents to the IMF congress in Washington in 2010 and 2011, during which they did nothing but tour.

Huh Duk-shin, president of Woori F&I, bought 30 million won worth of liquor and ties as presents to give out at the shareholders’ meeting and gave some to his friends.

Lee is to step down next month, to be succeeded by Lee Soon-woo, chief executive of Woori Bank.

“In order to retrieve the 12.8 trillion won in public funds, Woori’s share price has to be at least 15,555 won, but its price late last year was only 11,800 won,” the BAI said.

Woori Financial’s assets amount to 325.7 trillion won, the largest among the nation’s four big financial groups.

Its net profit of 1.28 trillion won last year, however, was the lowest among the four.

Woori Financial’s return on assets was 0.49 percent last year, below the average of rival financial groups ― 0.66 percent. Its operating profit per employee was 100 million won, below the average of 130 million won.

By Kim So-hyun (sophie@heraldcorp.com)