Bloomberg News

Korea Prosecutors Indict More Than 100 on Savings Bank Probe

November 02, 2011

Nov. 2 (Bloomberg) -- South Korean prosecutors indicted more than 100 people including the former chief of a financial regulator over alleged illegal lending and corruption involving suspended savings banks.

The accused include former Financial Supervisory Service Governor Kim Jong Chang for holding a stake in a Busan Savings Bank unit in violation of ethics laws, the Supreme Prosecutors Office said in an e-mailed statement today. Executives at Samhwa Mutual Savings Bank, Busan Mutual Savings Bank and Bohae Mutual Savings & Finance Co. were also charged.

Prosecutors have been investigating the suspended savings banks since March after the country’s Financial Services Commission shuttered the regional lenders’ businesses because of weak finances and cash flow. That prompted the government and lawmakers to probe the savings bank industry and criticize the FSS for failing to supervise it properly.

Some other FSS officials were indicted for dereliction of duty and accused of insufficient inspections, according to the prosecutors’ statement. A former presidential public relations secretary and a former national auditor were accused of taking bribes.

Kim Soo Mi, a spokeswoman for the FSS, declined to confirm or comment on how many former and current employees at the agency were indicted when asked by telephone today.

Efforts to reach former FSS Governor Kim Jong Chang for comment on the indictment were unsuccessful as his contact information wasn’t immediately available.

The FSS is a privately funded agency that enforces rules set by the Financial Services Commission, a state regulator.

--Editors: Russell Ward, James Gunsalus

To contact the reporter on this story: Seonjin Cha in Seoul at scha2@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net


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