Pres. Lee urges strict probe into savings bank scandal

President Lee Myung-bak urged Tuesday a thorough investigation into allegations of a mass exodus of funds from Busan Savings Bank’s five affiliate banks, Bohae Savings Bank and Domin Savings Bank just before their operations were suspended.

“The investigation results should be transparently released to the public,” he told a Cabinet meeting after receiving a report from Financial Services Commission Chairman Kim Seok-dong on the probe, according to presidential spokeswoman Kim Hee-jung.

At a discussion meeting immediately before the Cabinet meeting, President Lee said, “Why has the moral hazard of savings banks become so serious? The root cause of the problem should be tackled, including monitoring of employees at supervisory institutions. Make sure to restore the basic function of savings banks as institutions for low-income people.”

The Supreme Court said, “We will thoroughly investigate factual information and consider imposing criminal penalties on violators of law.”

Prosecutors launched a probe into two executives of the commission and the Financial Supervisory Service in charge of suspending savings banks’ business, as well as into 10 employees of Busan Savings Bank who handled massive withdrawals.

An initial probe showed that certain majority shareholders of the bank informed major clients and relatives about the upcoming suspension and allowed them to withdraw savings in advance. “We will investigate how the money was withdrawn and punish those involved in the secret leakage if illegality is confirmed,” a prosecutor said.

The main opposition Democratic Party and other opposition parties will hold a parliamentary probe into the case and push for the recovery of the money. Democratic Party lawmaker Woo Je-chang, assistant administrator of the parliamentary committee on state affairs, said, “We will address this matter at a parliamentary audit or hearing.”

Opposition lawmakers of the committee released a statement Tuesday, saying, “Immediate follow-up measures including the recovery of all funds should follow.”

The opposition lawmakers also visited the two financial watchdogs to hold protests.

yongari@donga.com ceric@donga.com