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National Australia Bank to Close Korea Branch

Posted June. 07, 2005 06:41,   


Course of Events-

Lee, the owner of the foundation of a private teaching institute in Seoul, consigned some 56.5 billion won to Choi (39), the manager of the treasury department of the National Australian Bank’s (NAB) Seoul branch from December 2001 to April 2003. Lee asked that the money be deposited as fixed deposits after listening to Choi, who said, “If you put your money in our bank, you will get higher interest rates than other banks as well as prime rates.”

However, Choi did not put the money in the bank. He privately invested the deposit money in stocks, futures and options and suffered a loss of 51.5 billion won.

In the process, Choi received Lee’s money at the NAB Seoul branch and deceived Lee by using a fabricated registered seal of the head of the branch. Choi also immediately refunded some of the money to Lee when Lee asked for a cancellation of part of the fixed deposits.

Choi’s fraud was revealed in May 2003 when a licensed tax accountant working for the foundation owned by Lee found that receipts of collection at the source (same as W-2 form in the U.S.) issued under the name of NAB were fabricated.

Court Rulings-

Lee filed a lawsuit against Choi and NAB with the Seoul Central District Court. The court ruled on February 4 that Choi shall pay 44.3 billion won and default rates, and that the NAB shall pay 36 billion won plus default rates on the amount out of the 44.3 billion won it had joint responsibility of with Choi. It also added that it could execute provisionally two-thirds of the damages paid by NAB.

The court said in its ruling that NAB, as his employer, cannot be free from the responsibility for failing to adequately supervise Choi.

NAB applied for a suspension of forced execution in an appeal of the first trial, which the court accepted on the condition that the bank pay a 5.3 billion won deposit.


Korean media outlets reported last month that NAB will close its Seoul branch, paying an extraordinary lay-off bonus.

An official at the Seoul branch said that the bank will withdraw from Korea as late as this year’s end.

This means that it could be hard for Lee to receive damages even if the ruling was upheld, because Lee would have to file a separate lawsuit against NAB headquarters in Australia in case there are no NAB assets remaining in Korea.

A judge on the Seoul High Court said, “It is hard to expect that a Korean court ruling would be executed overseas, as a country’s legal system normally favors its own citizens.”

Also, speculation is mounting over the court’s acceptance of the NAB’s application for suspension of forced execution. A lawyer who was a former judge pointed out, “It is exceptional that the court accepted the application, receiving just a fraction of the sought damages in deposit.”

An official at Financial Supervisory Service said, “We will not authorize the closure of NAB unless it clears up all its debts and credits in Korea.”

Keuk-In Bae Ji-Seong Jeon bae2150@donga.com verso@donga.com