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Another employee theft puts Woori’s reputation at stake

Woori Bank (Yonhap)
Woori Bank (Yonhap)
An employee at Woori Bank embezzled 490 million won ($380,000) earlier this year, reports said Thursday, dampening the lender’s struggle to rebuild its reputation after a separate 60 billion won employee theft was uncovered last month.

The employee, whose identity was withheld, stole the money by withdrawing from automatic teller machines from mid-January to early February. Woori recently found out about the theft through internal auditing. The bank detected irregular activities in related currency transaction reports -- a bank form that must be filled out by a bank representative whenever a customer attempts a “large” currency transaction -- on Feb. 7, and launched an internal investigation into the case. Woori then reported the case to the watchdog Financial Supervisory Service before recovering the stolen 490 million won from the employee. The employee was dismissed from the bank earlier this month, according to the reports.

Woori was not legally obligated to publically disclose the case, as the nation’s law only requires financial institutions to announce fraud or embezzlement amounting to over 1 billion won. However, financial institutions are required to report to the FSS if the amount exceeds 300 million won.

The bank did not take legal actions against the employee, and said that they were able to detect such mishap through its “strong” internal control system.

Thursday’s report puts Woori’s reputation at stake regarding internal control and employee ethics, as it comes mere weeks after the firm discovered that an employee in his 40s surnamed Jeon embezzled more than 60 billion won through three separate occasions from 2012 to 2018. The employee turned himself in on April 30 after the bank reported him to the police after identifying him as suspect.

Jeon was later found to have lost more than half of the stolen money from investments in high-risk stock derivative products. Jeon’s younger brother, who is not a bank employee, and a former employee of a Woori Bank affiliate were also arrested as suspected co-conspirators. Jeon lost 31.8 billion won after investing in futures option products, according to the police.

Most of the stolen money was from a 57.8 billion won contract deposit that Woori Bank was obligated to return to Iran‘s largest consumer electronics maker Entekhab Industrial Group. The deposit was related to the failed acquisition of now-dissolved Daewoo Electronics, dating back to 2010. The Korean government paid back most of the deposit to Entekhab, sources said Tuesday.

Experts expressed concerns about Woori’s internal control abilities and failure to detect such cases in an era where businesses are adopting stronger environmental, social and corporate governance policies.

“Woori’s embezzlement cases put the bank’s ESG-related ratings at risk,” an official at the Korea Corporate Governance Service said, requesting anonymity.

“It needs to change its strategy regarding ESG responsibility,” the official added.