Criminal Probe into Ex-Shinhan Bank Pres. Begins

Seoul prosecutors began an investigation Friday into allegations of embezzlement and breach of duty against Shinhan Financial Group President Shin Sang-hoon.

Shinhan Bank filed a criminal complaint against Shin, saying he illegally provided huge loans to companies in poor financial health while serving as the bank’s president.

Unlike that for an ordinary complaint, the investigation will be led by prosecutors specializing in finance since the complaint centers on breach of duty and embezzlement allegedly committed by a former bank president.

For starters, prosecutors will go over a written complaint and summon plaintiffs next week to gather more detailed information and evidence to support the allegations.

The probe will focus on how Shin gave large loans to companies with deficits for several years and how they used the loans.

On the embezzlement charge, prosecutors will see if anything illegal was committed in paying fees to advisers and if other bank staff were involved.

Shinhan Bank President Lee Baek-soon, who filed the complaint, left for Japan Friday at the urgent call of Lee Hee-gun, the bank`s honorary chairman and founder.

A source at the bank’s union said, “After a meeting with President Lee when he returns home Monday, we will announce our official stance,” adding, “We believe that convening a board meeting is basically inappropriate because of conflicting claims between the bank and Shin and the start of the criminal investigation.”

The union is drawing up countermeasures after holding talks with Shin and Shinhan Financial Group Chairman Ra Eung-chan.

jefflee@donga.com yunjung@donga.com