Savings bank scandal becomes hot political issue

Ruling party hints at parliamentary probe


State prosecutors found that President Lee Myung-bak’s confidant and former state auditor Eun Jin-soo violated the law to take part in auditing savings banks last year as they investigated Eun’s alleged involvement in a snowballing savings bank corruption scandal.

Eun stepped down as commissioner of the Board of Audit and Inspection Thursday after the prosecution sent him a subpoena, raising suspicions that he received bribes from the corruption-ridden Busan Savings Bank.

A former prosecutor, Eun worked as a legal adviser to the Busan bank for two years since 2005 and then as chief legal adviser to Lee’s presidential election camp in 2007.

Despite the BAI law that bans state auditors from inspecting entities related to them, Eun took part in an audit on savings banks last year.

Prosecutors said Friday they are trying to determine whether Eun received bribes from the Busan bank in return for lax inspection.

The ex-BAI official is suspected of peddling influence to leak the BAI’s audit information on the corruption-ridden Busan bank and delay the announcement of the audit results until early this year.

Eun’s alleged involvement has dealt a blow to Lee’s “fair society” campaign as well as efforts to strengthen his image as a leader who cares for ordinary people. Lee immediately accepted his resignation Thursday evening.

Eun was among the attorneys representing then leading presidential candidate Lee in 2007 when Lee was implicated in a stock price-rigging scandal dubbed “the BBK case.” He later joined Lee’s presidential transition team as a legal adviser. Prior to that, in 2004, he served as a spokesperson of then-opposition GNP.

With Eun embroiled, what first started as a financial corruption case is turning into a political scandal that could implicate some key members of the incumbent or former administrations.

The ruling Grand National Party’s new floor leader Hwang Woo-yeo said Friday he believes a parliamentary probe should be launched, if necessary, to look into the savings bank scandal.

The remarks by Hwang, who is serving as acting party chief, hinted at the possibility of launching a parliamentary probe into the scandal showed how seriously he views the scandal that comes at a time when the party is trying to win back public support after last month’s humiliating election defeat.

“Once the ongoing probe is completed, I think a parliamentary probe should be conducted if necessary,” Hwang said at a meeting of key party officials.

“The people are concerned as surprising suspicions surfaced that a sitting member of the Board of Audit and Inspection was involved.”

Hwang called for a thorough probe, saying the BAI needs to restore people’s trust.

The prosecution obtained a statement that Eun, 50, received hundreds of millions of won from a close confidant to the vice chairman of Busan Savings Bank in exchange for overlooking the bank’s illegal lending and other wrongdoings early last year, they said.

The statement came from a detained bank official who led the lender’s lobbying on politicians and influential government officials, according to officials from the Supreme Prosecutors’ Office.

But the investigators refused to elaborate on details of the statement.

The prosecution has been widening its probe after executives and other major shareholders at the Busan bank and its affiliates were found to have taken out illegal loans to lobby politicians and officials and engaged in other financial irregularities involving around 7 trillion won ($6.4 billion). The banks were suspended for capital shortages in February.

Prosecutors are also looking into suspicions that Eun asked the bank official to help his elder brother get a job at a local hotel.

They added that Busan Savings Bank had allegedly gained favorable treatment from financial regulators and built ties to powerful politicians through Eun.

They said that they will summon Eun soon to question him over these allegations.


By Kim So-hyun and news reports  (sophie@heraldcorp.com)