Prosecutors have indicted 10 current and former Industrial Bank of Korea (IBK) employees on charges tied to hundreds of billions of won in improper loans. Prosecutors said that, in the process of a real estate developer surnamed Kim receiving illegal loans worth 74.4 billion won, a credit review chief and an executive took money and valuables.
The Seoul Central District Prosecutors' Office's Anti-Corruption Investigation Division 1 (headed by Director General Lee Hee-chan) said on the 12th that it additionally indicted Kim on charges of violating the Act on the Aggravated Punishment of Specific Economic Crimes (fraud), bringing the total so far to three people indicted and detained and seven indicted without detention.
Kim is accused of obtaining illegal loans worth 74.4 billion won by going through Industrial Bank of Korea (IBK) employees or deceiving bank staff with fake contracts. Prosecutors explained that a person surnamed Cho, the head of the credit review center, was found to have pressured working-level staff by using a senior reviewer position and approved the illegal loans.
Prosecutors found that as the reviews were conducted poorly, loans that were excessive or ineligible for support were also approved, and that Kim, based on Cho's assistance, even played the role of a broker arranging loans.
Cho was found to have received money and valuables worth 302.45 million won and stocks worth 60 million won from Kim and others in return for turning a blind eye to the illegal loans.
Prosecutors said Kim used the loan proceeds to construct a building named after himself and pushed for Industrial Bank of Korea (IBK) to move in, and to that end repeatedly sought favors from then-vice president A through golf entertainment. Despite opposition from working-level staff, A forced through the branch move-in and was found to have later had apartment interior expenses worth 113.3 million won paid on his behalf by Kim.
Prosecutors said Kim "used a state-run financial institution like a private safe." The point is that he leveraged personal connections formed through golf entertainment and providing money and valuables for loans and the move-in.
The investigation gained momentum when the Financial Supervisory Service referred suspicions early last year of massive illegal loans at Industrial Bank of Korea (IBK) to prosecutors. After searches and account tracing, prosecutors on Jul. 1 last year indicted and detained Kim and Cho on charges including violating the Act on the Aggravated Punishment of Specific Economic Crimes (breach of trust), and also indicted without detention Kim's spouse, B, who was Head of Team at IBK's credit review center, three branch managers, and the head of a borrowing company.
On the 19th of last month, prosecutors indicted A and detained him on charges of receiving improper benefits after malfeasance and bribery, and said Kim was additionally indicted on charges including offering bribes.