By Kim Da-ye
A series of corruption allegations and criticism of the financial authority’s complacent dealing with fraud at savings banks has tainted its reputation as well as leaving the organization in shock.
President Lee Myung-bak visited the Financial Supervisory Service (FSS) Wednesday, pointing out that the organization is facing “the greatest crisis of its life” and censured the public’s badly injured trust in the authority.
Rep. Woo Che-chang of the Democratic Party even questioned the need for the FSS because of its cozy relationship with businesses, arguing that it could be integrated into the Bank of Korea or the Financial Services Commission (FSC).
The latest blow to the FSS came late night Tuesday from the suicide of an employee identified as Kim at its Busan branch.
Kim and his wife allegedly deposited 53 million won in the second unit of Busan Savings Bank that closed two days after the main branch closed on Feb. 17.
The wife, who felt the second unit could be closed soon as well, withdrew her savings worth 59 million won including interest legitimately on the 17th.
But as the FSS urged its employees to voluntarily report their withdrawals from the suspended banks, Kim is known to have been under tremendous pressure.
On Tuesday, the Gwangju unit of the Prosecutors’ Office found a former high-ranking official of the FSS received kickbacks worth hundreds of millions of won from Bohae Bank, a savings bank in South Jeolla Province, in 2009 for helping it make illegal loans.
The former FSS official identified only by his surname Lee was working as an auditor for KB Asset Management, but went missing after being charged by the prosecution on April 28.
Prosecutors also detained an FSS investigator identified as Chug for receiving some 40 million won for arranging illegal loans.
The close relationship between the financial watchdog’s officials and businesses is said to be the main factor behind the corruption.
According to Rep. Ooh, 19 former officials of the FSS became auditors at savings banks between 2006 and 2010 while the financial industry including the banking, securities, insurance and credit card sectors hired 103 of them.
In 2009, it took only seven days for 38 senior officials of the FSS to find a new job, Ooh said in a statement.
“Laundering jobs, which were created to give to retirees from the FSS and to avoid regulation that does not allow them to seek job in related industries for three years, became a habit,” Ooh said.
The financial watchdog vowed to reform the organization Wednesday after President Lee’s visit.
“We will completely abandon the custom of recommending current and former employees as financial institutions’ auditors and will reject requests from the organizations for suggestions,” the FSS said in a statement.
The FSS said that it will conduct an evaluation of all employees to measure their integrity, and those with low scores won’t be placed in departments dealing with the approval of projects, investigations and public filings.
An official said that the authority is still mulling over when and how the plans will be executed after they were announced Wednesday.