Regulator opens probe into ex-banking chiefs for possible irregularities

The financial regulator has widened its probe into alleged corruption at a local bank to an all-out scrutiny against former heads of four major banking groups here, amid growing criticism over their arbitrary management, regulatory officials said Monday.

The Financial Supervisory Service (FSS), began to look into managerial-level malpractices involving the former chairmen of four banking firms -- KB Financial Group Inc., Hana Financial Group Inc., Woori Finance Holdings Co. and Shinhan Financial Group Co. -- since 2008, according to FSS officials.

The expanded probe came as the FSS decided to widen the investigation to other major banks amid a set of ongoing inspections into alleged corruption at Kookmin Bank.

The flagship unit of KB Financial Group has lately been subject to a heavy investigation by the FSS for three separate allegations, including the suspicious role of its Tokyo branch manager in running slush funds for KB Financial executives.

The FSS is apparently zeroing in on whether former KB Financial Chairman Euh Yoon-dae had knowledge of the matter and to what extent he was involved in such irregular acts.

The list of possible suspects was expanded to now include the other three ex-chairmen. It is difficult to rule out the possibility that they had also been somehow connected to corruption allegations that took place during their terms, the FSS said.

Kim Seung-yu, the former chief of Hana Financial Group, is suspected of buying some 4,000 artworks with company funds from a gallery owned by a former Hana executive.

Former Woori Finance chief Lee Pal-seung has been investigated by the FSS over his involvement in incurring the banking group massive loan losses from a defaulted development project.

The regulator has also launched a probe into suspected illegal access to client information by Shinhan Financial Group employees, which calls Ra Eung-chan, the lender's ex-chairman, into question.

Some market watchers claimed that the FSS is taking aim at the former government, since all of the four ex-banking chiefs are known to be close aides of former President Lee Myung-bak.

An FSS official, requesting anonymity, denied that the probe has any political agenda, saying it is part of an all-out effort to clamp down on corruption in the financial industry. (Yonhap news)