The Financial Supervisory Service (FSS) has accused two employees of Lotte Card Co. and the head of a subcontractor of breach of trust. This is the latest in a string of moral hazard cases involving financial companies.
The FSS filed a complaint against the three with the prosecution on August 14, claiming that the two Lotte employees had conspired with the head of the subcontractor to guarantee that the subcontractor would win a 10.5 billion-won (US$7.9 million) deal for the promotion of Lotte Card products.
The two marketing employees of Lotte Card allegedly diverted 6.6 billion won from the 10.5 billion won to a paper company and their family-owned companies, as well as investing in real estate and purchasing cars. The FSS will investigate how the remaining 3.9 billion won the head of the subcontractor received was used, noting that only a small part of the money appears to have gone towards the promotion of Lotte Card.
The FSS stated that Lotte Card’s internal control system had not functioned correctly. This is not the first time that financial companies have been embroiled in embezzlement and other irregular activities: last September, an employee of Woori Bank was sentenced to 13 years in prison for collaborating with his brother to steal 61.4 billion won.
The prosecution recently launched an investigation into allegations that an employee at BNK Kyongnam Bank misappropriated up to 110 billion won, and the FSS is also looking into allegations that KB Kookmin bank employees made an unfair profit of 12.7 billion won by taking advantage of undisclosed information, as well as claims that some employees of DGB Daegu Bank opened around 1,000 securities accounts using customers’ documents without their knowledge.