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Photo courtesy of Gyeongnam Bank |
[Alpha Biz= Kim Sangjin] The Securities and Futures Commission (SFC) under the Financial Services Commission (FSC) decided on penalties, including fines, against Gyeongnam Bank on Wednesday for violations of accounting standards in the preparation and disclosure of its financial statements.
During its second meeting, the SFC agreed to designate an auditor for the bank for one year. Additionally, it imposed a fine of 3.5 billion won on the bank and 20 million won on the CEO.
The fine amount was significantly reduced compared to the original amount proposed by the Financial Supervisory Service (FSS). The FSS had initially recommended fines of approximately 14 billion won for the bank and 70 million won for the CEO.
According to the SFC, Gyeongnam Bank failed to appropriately reflect a fund embezzlement by an employee in its financial statements for 2021, resulting in an overstatement of its equity by around 100 billion won.
Previously, Gyeongnam Bank had been involved in a massive embezzlement scandal related to a real estate project financing (PF) loan worth around 3 trillion won. During an on-site inspection of the bank's real estate PF loan in August 2023, the FSS discovered that an employee in the bank’s investment finance department had embezzled funds by misappropriating loan and repayment funds for PF projects from 2007 to 2022. The embezzled amount was found to be a record 3.089 trillion won in South Korea.
Furthermore, Gyeongnam Bank used the 2021 financial statements, which violated accounting standards, in securities filings.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
