Doubts over probe into savings bank scandal

In wrapping up the probe into the Busan Savings bank scandal on Wednesday, prosecutors indicted 76 people for financial corruption at the banks` five affiliates worth 9 trillion won (8 billion U.S. dollars). Former Financial Supervisory Service Gov. Kim Jong-chang was also indicted, becoming the highest ranking government official to face charges in the scandal. Prosecutor General Han Sang-dae called the debacle "a large vicious crime." Kim was charged without detention for hiding his ownership of an equity stake in a company that invested in the ailing bank, then registered his shares under his wife`s name. Under the law governing public officials` ethics, he should have sold off the equity or put it in a blind trust before taking the top post of the financial industry watchdog. The fundamental problem of the scandal, however, cannot be solved by just indicting Kim.

The key to this problem is exposing how lawmakers and government officials got involved in illegal loans of 6.03 trillion won (5.06 billion dollars) and accounting fraud worth 3.04 trillion won (2.09 billion dollars). Over the past eight months, the central investigation unit of the Supreme Prosecutor`s Office found corruption committed by 20 former and current executives of Busan Savings Bank. Kim Doo-woo, former senior presidential secretary for public affairs, and Eun Jin-soo, former commissioner of the Board of Audit and Inspection, were found to have accepted bribes in return for helping the now-suspended Busan Mutual Savings Bank to survive regulatory audits. Prosecutors also found 1 trillion won (894 million dollars) in real estate and hidden assets of the employees of the bank and related companies, as well as finding former and incumbent employees of the Financial Supervisory Service and the National Tax Service implicated.

Considering that the scandal involved a huge amount of money, more people must have been involved. The probe results are also a bit unconvincing. The use of hundreds of millions of dollars for lending to special purpose companies related to political matters, including a land development project of Shinan County in South Jeolla Province, have yet to be unveiled. Parts of the loans are assumed to have been used as secret funds by certain majority shareholders or for lobbying politicians and government officials.

Prior to the Asian currency crisis in 1997, Busan Savings Bank had a low profile even among non-banking financial institutions. Under the past three administrations, including that of President Lee Myung-bak, the bank grew rapidly and bad loans also piled up. This suggests that lawmakers from both the ruling and opposition parties supported the bank. How lobbyist Park Tae-kyu used 1.7 billion won (1.52 million dollars) in funds he received also remains unknown.

Prosecutors have also yet to find the extent of the corruption of Busan Mutual Savings Bank over the course of its rapid growth. Many are skeptical over the probe because of prosecutors and prominent officials of the former and incumbent governments were involved. Prosecutors might have been reluctant to investigate or were prevented from properly carrying out their duties.