A person enters the Industrial Bank of Korea headquarters building in Jung District, central Seoul, on March 25. [NEWS1]

 
The value of illicit loans involving current and former employees at the state-run Industrial Bank of Korea (IBK) uncovered by the Financial Supervisory Service (FSS) has ballooned to 88.2 billion won ($60 million).
 
The announcement was made on Tuesday, as the financial watchdog released its findings of recent investigations into allegations of unfair transactions and insider misconduct.
 
With the latest discovery, the total amount of unlawful loans discovered at IBK increased by some 64.2 billion won from the 24 billion won initially reported by the state bank in January.
 
According to the FSS, a former IBK employee colluded with their spouse — who worked in the bank’s loan review team — as well as former colleagues to unlawfully take out loans or help others receive loan approval by inflating the value of real estate collateral. A total of 51 loans worth 78.5 billion won were taken out over the course of seven years.
 
The bankers involved are suspected of receiving bribes as well.
 
In a separate case, an unnamed employee in charge of loan qualification conspired with a lender to approve five loan applications totaling 2.7 billion won. His sister-in-law served as a chief executive of an affiliate of the lender, which provided kickbacks and bribes to the banker through her.
 
Moreover, another employee helped a former colleague take out illicit loans worth 7 billion won and received a 400 million won property on the pretense of investment gains.
 
The FSS also alleges that IBK deliberately delayed reports and downplayed the scope of the illegalities despite being aware of them. The bank also deleted some internal review documents during the FSS investigation, according to the regulator.
 
“The FSS discovered attempts at an orchestrated cover-up by not only the perpetrators but also the bank during the investigation,” said FSS First Senior Deputy Gov. Lee Se-hoon during a press briefing at the regulator’s headquarters in western Seoul on Tuesday.
 

Financial Supervisory Service First Senior Deputy Gov. Lee Se-hoon speaks during a press briefing at the regulator’s headquarters in western Seoul on March 25. [NEWS1]

 
Of the 88.2 billion won, the outstanding balance stands at 53.5 billion won, of which 9.5 billion won was classified as nonperforming, Lee added.
 
IBK CEO Kim Sung-tae issued a statement the same day, saying, “I apologize for causing distress to our customers and the public.”
 
The bank will announce an intensive overhaul plan to improve its operational procedures, internal control system and corporate culture to prevent a recurrence, according to Kim.
 
In the same briefing, the FSS also revealed that Bithumb, Korea’s second-largest cryptocurrency exchange, provided luxurious company housing to four of its current and former executives without any appropriate internal control rules regarding housing benefits. The combined deposits for the residences amounted to 11.6 billion won.

BY SHIN HA-NEE [[email protected]]