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[Op-Ed] Borrowed Name Bank Accounts

Posted March. 21, 2009 08:19,   


On Oct. 19, 1995, Park Gye-dong of the then Democratic Party (now secretary-general of the National Assembly Secretariat) raised suspicion that ex-President Roh Tae-woo raised slush funds in a parliamentary interpellation session. “We have confirmed that 30 billion won (39 million U.S. dollars) was deposited at Shinhan Bank’s Seosomun branch in three accounts with borrowed names, at 10 billion won each (13 million dollars),” Park said, showing evidence of the balances in the accounts. As generals-turned politicians who came to power through a coup were found to have amassed huge slush funds, presidents Chun Doo-hwan and Roh eventually ended up in prison. The starting point of the move to punish them was prosecution for illegal slush funds, not the coup, and the tool used was a crackdown on borrowed-name bank accounts.

Borrowed-name bank accounts are opened with borrowed or stolen names. Normal hardworking people have no reason to open accounts under borrowed names. In most cases, corrupt politicians, officials or businesspeople use such accounts to conceal illegal funds amassed through bribe-taking or embezzlement. Borrowed name accounts were also used in bribery scandals involving former National Agricultural Cooperative Federation Chairman Chung Dae-kun and former Democratic Party supreme council member Kim Min-seok, and the shocking embezzlement of billions of won by a low-ranking civil servant in South Jeolla Province.

Greed can even split father and son or brothers. Due to the power of money, disputes also erupt between people who lend their names for bank accounts and the owners of money deposited in borrowed name accounts. Former President Roh is embroiled in a legal dispute with his younger brother Jae-woo, while former Political Affairs Minister Park Chul-un is at odds with a former college dance professor. At certain companies, employees who lent names for bank accounts to majority stakeholders or to accounts for company slush funds would pocket the money deposited in their names or blackmail the real owners.

In a ruling made Thursday, the Supreme Court said, “Money deposited in a bank account with a borrowed name should be construed as belonging to the account holder, even if there is a real owner.” The ruling has made it difficult for the owner of money to claim money deposited in a bank account under a borrowed name. The verdict will likely increase transparency as it will further consolidate the real-name financial transaction system. Many people will likely think twice about putting funds into borrowed name accounts for fear of losing their money. Many others could betray their acquaintances and take this as an opportunity to pocket money they were simply entrusted to hold for someone else.

Editorial Writer Kwon Sun-hwal (shkwon@donga.com)