Busan Savings Bank draws fresh suspicion for shady land deals

A ruling party lawmaker on Wednesday disclosed fresh allegations of embezzlement involving Busan Savings Bank, insisting that the corruption-ridden lender bought real estate along the southwest coast for inflated prices that were up to 10 times more expensive than the market value.

Rep. Ko Sung-doug of the Grand National Party (GNP) said the Busan-based institution, which was suspended in February due to capital shortages, is suspected of creating tens of billions of won in slush funds through shady real estate deals.

Ko disclosed documents showing that Busan Savings Bank had bought vast plots of coastal land in South Jeolla Province between

2005 and 2009 through six of its special purpose companies under the pretext of building a multi-purpose resort park.

According to Ko, one of the six entities spent 120 billion won to buy land appraised at 21.3 billion won ($20.1 million) as of last year, while another company bought nearby land for 37.2 billion won, an amount over 10 times that of the market value.

"In the shady real estate deals, Busan's subsidiaries paid about 10 times as much as the market price appraised in 2005," said Ko, who is a member of a parliamentary investigation committee on savings bank scandal. "It is possible that political heavyweights and major shareholders of Busan Savings Bank at the time may have bought the land under borrowed names and gained enormous profits from the deals."

In a rare bipartisan effort, a special parliamentary committee was launched earlier this month to investigate the savings bank scandal and work out assistance measures for victims of irregularities by savings banks.

The parliamentary probe has hit a snag in the past weeks, however, with ruling and opposition parties wrangling over the list of witnesses subject to stand in front of the National Assembly for three hearings scheduled for early August.

The scandal centers on allegations that some savings banks engaged in a string of irregularities and bribed financial regulators and politicians to seek their influence to avoid punishment. (Yonhap News)