Former FSS chief quizzed over bank scandal

(ATTN: RECASTS lead, paras 2-3, ADDS detail in paras 4, 9-11; TRIMS headline)
SEOUL, June 9 (Yonhap) -- A former top financial regulator was being questioned Thursday for his alleged involvement in a snowballing savings bank scandal, prosecution officials said.
Kim Jong-chang, 63, a former governor of the Financial Supervisory Service (FSS), arrived at the Supreme Prosecutors' Office (SPO) in southern Seoul around 10 a.m. to answer questions from investigators.
He is suspected of having used his influence to help ease the FSS's inspection of the troubled Busan Savings Bank while in office early last year at the request of a former state auditor accused of serving as a lobbyist for the bank.
Prosecution officials said that they will question him over whether he received money in return.



Eun Jin-soo, the former auditor of the Board of Audit and Inspection (BAI) and a former aide to President Lee Myung-bak, was arrested last week for taking bribes from the now-suspended Busan Saving Bank in exchange for lobbying influential government officials and politicians to save the bank.
Prosecutors said Kim was summoned as a witness, not as a suspect, this time, but his status can be changed if he is found out to have meddled in FSS inspections on the bank.
Investigators said they will interrogate Kim over whether he has had a closer relationship with the corrupt bank, considering that he had worked as a board member of a real estate trust company before taking office as the FSS governor in March 2008. The company is known to have invested 9 billion won (US$8.3 million) in buying stocks of Busan Savings Bank and to have sold part of them.
The prosecutors also said they will investigate into allegations that Kim had held the stake of the trust company under a borrowed name until he completed his three-year term as FSS chief in March.
Investigators said that they will look into whether Kim delayed FSS's joint inspection with the Korea Deposit Insurance Corporation for about a week in February last year to buy time for the bank to prepare for it.
Meanwhile, the prosecution on Thursday sought an arrest warrant for the head of one of the paper companies established by Busan Savings Bank on charges of receiving money from the bank, officials said. They suspect he used the money to lobby local government officials.
Busan Savings Bank set up some 120 paper companies and has its executives and shareholders run them to use the companies as channels to gain illegal loans. He could be the fourth executive of the paper companies to be arrested for the probe into the savings bank scandal, prosecutors said.
Earlier this week, prosecutors arrested Kim Gwang-soo, commissioner of the Korea Financial Intelligence Unit (FIU), for allegedly receiving bribes from the bank in return for helping the bank take over two smaller savings banks and avoid suspension.
The FIU is an affiliate organization of the Financial Services Commission, the country's financial rule-making body.
The Busan Savings Bank scandal has jolted the nation for months since the bank was accused of tipping off its employees' relatives and VIP customers about its impending suspension in February so as to help them withdraw their deposits in advance.
The bank was later found to have engaged in extending illegal loans to large shareholders and other financial irregularities involving 7 trillion won in total, leading its chairman, Park Yeon-ho, and several major shareholders to be prosecuted.
brk@yna.co.kr