Illegal loan, embezzlement amounts in savings bank scam snowball

Prosecutors investigating irregularities at suspended savings banks said Thursday that the amount of illegal loans given and embezzlement has snowballed.

In particular, the amount of illegal loans and embezzlement committed by Kim Chan-kyung, chairman of the suspended Mirae Savings Bank, is estimated at nearly 500 billion won (438 million U.S. dollars). A joint government investigation team said Thursday, “It`s difficult at this point to conclude how much money was involved in irregularities because we continue to find more cases of illegal loans and embezzled funds.”

Prosecutors said they found Kim implicated in 450 billion won (394.2 million dollars) in illegal loans, including 400 billion won (350.4 million dollars) he borrowed through a special purpose company he founded under a borrowed name to raise funds to build a golf course in South Chungcheong Province. He also took another loan worth 50 billion won (43.8 million dollars) in the same manner to invest in a luxury handbag company.

Kim is known to have embezzled 48 billion won (42 million dollars), including the money he withdrew just before trying to flee the country and the money he raised by selling stocks owned by his bank. The 5.6 billion won (4.9 million dollars) that he claimed was stolen and the money he spent to buy his daughter’s paintings at inflated prices can also be included.

The probe is focusing on irregularities committed by executives and major shareholders of savings banks. Yet many observers say prosecutors are also investigating if the suspects offered bribes to politicians and government officials.

In a previous inspection of other savings banks, investigators discovered bribery involving an incumbent presidential secretary, lawmakers and officials at audit and financial authorities. The probe is also trying to find out if Kim used part of the funds he embezzled to offer bribes.

minki@donga.com