Woori Bank came under scrutiny for an internal control failure Thursday, after an employee confessed to embezzlement of 50 billion won ($39.4 million).

The employee is currently in police custody and investigators are looking to probe the lender’s headquarters to verify the suspect’s statement and seize evidence.

The Financial Supervisory Service, the nation’s financial watchdog, said it will launch an investigation into the case as well, having received reports about it a day earlier.

According to local reports, the unidentified employee is believed to have siphoned the sums while handling the botched takeover of Daewoo Electronics by a Iranian business group, Entekhab Industrial. 

The sale was supposed to fetch 578 billion won, but was canceled by the firm’s main creditor, state-run Korea Asset Management Corp., following Entekhab‘s request for a discount. Kamco has refused to return 57.8 billion won, 10 percent of the total, paid by Entekhab and the Iranian group has taken the matter to an international court.

The Woori employee appears to have diverted some of the disputed funds into his or her own pockets.

Police officials said the suspect confessed at the Namdaemun Police Station around 10:30 p.m. on Wednesday, and they will now consider seeking an official court arrest warrant.

Woori Bank has yet to release an official statement. A public relations official at the company could not be reached for comment.

A Woori Bank official said the bank is closely looking into how the embezzlement went unnoticed and that it will cooperate with the investigation.

An FSS official said, “The amount is huge and this is really serious.”

The Woori Bank case follows a massive scandal at local dental implant maker Osstem Implant Co. where an employee embezzled a total of 220 billion won.

Trading resumed for the firm’s shares on the secondary Kosdaq bourse Thursday, following a monthlong suspension. The embezzled amount was larger than the entire equity capital of Osstem at the time -- 204.7 billion won -- making the company eligible for a deliberation on delisting.

Woori is unlikely to face a stock trading ban, as the embezzled amount is far less than 3 percent of its total equity capital, not requiring the measure intended to protect investors and public interest.

Shares in Woori Financial Group, the holdings frim of the lender, were trading 2.6 percent lower from the day earlier at around noon Thursday. 


By Yoon Min-sik
(minsikyoon@heraldcorp.com)