ID :
185078
Sun, 05/29/2011 - 06:12
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Shortlink :
https://oananews.org//node/185078
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Regulator inspects Shinhan Bank over embezzlement case
SEOUL, May 29 (Yonhap) -- South Korea's financial regulator has launched a special inspection of Shinhan Bank to look into the lender's potential financial losses stemming from its lax management of entrusted funds, sources said Sunday.
The Financial Supervisory Service (FSS) dispatched inspectors to Shinhan Bank Wednesday to quiz bank employees in charge of dealing with the lender's lawsuit against Dongah Construction Industrial Co. and two Dongah Construction employees who embezzled the builder's money entrusted to the bank.
The inspection came as the Seoul Central District Court ordered earlier in May the No. 3 lender in South Korea to recover 89.8 billion won (US$82.9 million) of embezzled money from the employees, holding the bank accountable for lax management of the entrusted funds.
As it went under a debt repayment program in 2007, debt-ridden Dongah Construction entrusted 168.7 billion won of funds to Shinhan Bank with 141 creditors designated as recipients of profits from the fund management.
The two former Dongah employees, then in charge of handling the builder's money, stole 89.8 billion won in 2009 by letting Shinhan Bank replace some of the designated recipients with Dongah Construction-named bank accounts.
The court said Shinhan Bank is responsible for the fund embezzlement because it failed to carry out the duties of a trustee in finding the right recipients of the entrusted funds.
Through the latest inspection, the FSS will look into whether the bank properly handled the trust fund account. The embezzlement case could bring a massive financial loss to Shinhan bank if it loses the lawsuit, the regulator explained.
Shinhan Bank declined to comment on the special inspection that came only five months after the FSS's regular test on the third-largest local bank. The regulator had launched a month-long inspection on Shinhan Bank as part of regular bank checkups in November.
"The fact that the FSS launched the inspection over the first court trial came to our surprise," a Shinhan Bank official said.
The Financial Supervisory Service (FSS) dispatched inspectors to Shinhan Bank Wednesday to quiz bank employees in charge of dealing with the lender's lawsuit against Dongah Construction Industrial Co. and two Dongah Construction employees who embezzled the builder's money entrusted to the bank.
The inspection came as the Seoul Central District Court ordered earlier in May the No. 3 lender in South Korea to recover 89.8 billion won (US$82.9 million) of embezzled money from the employees, holding the bank accountable for lax management of the entrusted funds.
As it went under a debt repayment program in 2007, debt-ridden Dongah Construction entrusted 168.7 billion won of funds to Shinhan Bank with 141 creditors designated as recipients of profits from the fund management.
The two former Dongah employees, then in charge of handling the builder's money, stole 89.8 billion won in 2009 by letting Shinhan Bank replace some of the designated recipients with Dongah Construction-named bank accounts.
The court said Shinhan Bank is responsible for the fund embezzlement because it failed to carry out the duties of a trustee in finding the right recipients of the entrusted funds.
Through the latest inspection, the FSS will look into whether the bank properly handled the trust fund account. The embezzlement case could bring a massive financial loss to Shinhan bank if it loses the lawsuit, the regulator explained.
Shinhan Bank declined to comment on the special inspection that came only five months after the FSS's regular test on the third-largest local bank. The regulator had launched a month-long inspection on Shinhan Bank as part of regular bank checkups in November.
"The fact that the FSS launched the inspection over the first court trial came to our surprise," a Shinhan Bank official said.
