The Korea Deposit Insurance Corporation (KDIC)'s Financial Misconduct Investigation Headquarters, established to hold officials at insolvent financial companies accountable, will be merged with the recovery organization and disappear after 18 years. The workload has fallen as bankruptcies among financial companies have decreased. The prosecutor seconded from the prosecution service who led the headquarters also returned earlier than planned.
According to the financial sector on the 9th, the Korea Deposit Insurance Corporation (KDIC) recently carried out an organizational reshuffle to create a new "Recovery and Investigation Headquarters" by integrating the Financial Misconduct Investigation Headquarters with the Recovery Planning Department and the Credit Management Department. It bundled the financial misconduct investigation function, which had been operated as a separate headquarters, together with debt recovery and asset sales.
Launched in 2008, the Financial Misconduct Investigation Headquarters handled several major cases, including the savings bank crisis. It has conducted postmortem probes into the causes of insolvency at financial companies that faced business suspension or bankruptcy to determine whether controlling shareholders and executives committed embezzlement, breach of trust, or made bad loans and other illegal or improper acts, and, when responsibility was found, sought to recover losses to the deposit insurance fund through damage claims and other means.
However, as the restructuring of savings banks wrapped up and large-scale bankruptcies among financial companies became rare, the pool of investigation targets also shrank. KDIC had operated by granting a vice president rank to the Director General-level prosecutor seconded as head of the Financial Misconduct Investigation Headquarters, but with the integration of the organization and under the Ministry of Justice's personnel moves, the prosecutor shortened the secondment, originally until Aug., and returned to the Seoul High Prosecutors' Office in the July reshuffle.
KDIC's misconduct investigation function had been run in tandem with recovering KDIC funds injected during the savings bank crisis. KDIC decided to integrate the investigation and recovery functions as major litigation and asset-tracing work related to bankrupt financial companies has largely entered the final stage and demand for new investigations has declined.
Following the abolition of the Financial Misconduct Investigation Headquarters, the newly launched Recovery and Investigation Headquarters will take on tasks ranging from selling assets and recovering loan claims when a financial company goes bankrupt to investigating responsibility in the process that led to insolvency.