[비즈한국] The Financial Supervisory Service (FSS) and the prosecution have officially launched full-scale investigations into Woori Financial Group316140. The Seoul Southern District Prosecutors' Office has commenced an investigation into the controversy surrounding preferential loans granted to relatives of former chairman Son Tae-seung. FSS Governor Lee Bok-hyun intensified the pressure, stating, “Given the behavior currently being shown by Woori Financial, it has reached a point where it is no longer possible to trust them.” This suggests that legal risks could loom over the entire Woori Financial Group, extending beyond just Woori Bank to its savings bank and capital affiliates.
Relatives of Former Chairman Son Also Subject to Search and Seizure
On the 27th, the prosecution conducted search and seizure operations regarding the allegations of unfair lending to relatives of former Chairman Son Tae-seung. The Financial Investigation Division 1 of the Seoul Southern District Prosecutors' Office (led by Chief Prosecutor Kim Soo-hong) raided eight locations, including the Woori Bank headquarters in Jung-gu, Seoul, and the Seolleung Financial Center, as well as four residences associated with the case.
The case began on the 11th when the FSS announced that Woori Bank had extended inappropriate loans worth 35 billion won to relatives of former Chairman Son. According to the FSS and the prosecution, Woori Bank provided a total of 61.6 billion won in loans to Son’s relatives between April 2024 and last January. During the same period, loans totaling 45.4 billion won (23 cases) were extended to 11 borrowers (corporations and individual business owners) related to Son. Of these, 16.2 billion won (19 cases) was funneled to nine borrowers suspected of being used by his actual relatives.
A legal expert familiar with the matter noted, “I understand that the relatives were also included in the target list for the search and seizure,” adding, “However, it is somewhat ambiguous whether their relationship with the former chairman can be classified as very close. As of now, former Chairman Son Tae-seung has not been subject to a search and seizure.” This implies that the prosecution’s investigation is currently at the stage of "verifying basic facts."
In fact, while the FSS confirmed that loan processing, screening, and post-management were handled arbitrarily at the branch level without approval from the head office, it failed to uncover evidence of former Chairman Son Tae-seung’s involvement in this process. Even if the former chairman was aware of the loans, holding him legally accountable may be difficult unless it is proven that he explicitly instructed staff to "take care of his relatives."
The aforementioned legal expert explained, “They must have started the investigation because they judged that there was a problem, but what matters most is the kind of testimonies they can obtain from Woori Bank or the employees who handled the work at the time,” adding, “That is why they deployed the Seoul Southern District Prosecutors' Office Financial Investigation Division 1, the top-tier unit for financial crime investigations, to handle this case.”
Is Lim Jong-yong Also Being Targeted?
The investigation and probe into the nature of the unfair lending allegations involving former Chairman Son’s relatives are expanding across the board.
During an FSS executive meeting on the 20th, Governor Lee Bok-hyun remarked, “Woori Bank’s failure to report the unfair lending case to the FSS on the grounds that there was ‘no clear illegal activity’ is a form of self-rationalization.” Appearing on KBS’s 'Sunday Diagnosis' on the 25th, he added, “Rather than viewing Woori Financial and Woori Bank with trust, we need to uncover the truth through inspections, based on the premise that they might be hiding issues.”
As the controversy escalated, Chairman Lim Jong-yong held an emergency executive meeting on the 28th and bowed his head, stating, “I once again sincerely apologize for causing great concern to the public and our customers.” However, the FSS plans to focus on whether Chairman Lim Jong-yong and Woori Bank President Cho Byung-kyu were aware of the unfair lending allegations and intentionally omitted them from their reports during an additional on-site inspection starting August 22nd. The FSS also intends to conduct on-site inspections of other Woori Financial Group subsidiaries, including capital and savings bank units, where suspicious loans have been detected.
This has led to speculation that FSS Governor Lee Bok-hyun might be using the "former chairman (Son Tae-seung) risk" as a pretext to shake up the current chairman (Lim Jong-yong). Indeed, if Chairman Lim receives a heavy penalty due to management responsibility, his future will become uncertain. Penalties for individual executives range from dismissal recommendations and suspension of duties to disciplinary warnings, caution, and reprimands; those receiving a disciplinary warning or higher are barred from employment in the financial sector for three to five years. Chairman Lim’s term ends in March 2026, and if he receives a heavy penalty from financial authorities, his tenure will inevitably face constraints.
A key official in the financial authorities predicted, “This case could be seen as a process through which FSS Governor Lee Bok-hyun, who has faced recent controversy over personnel issues, is trying to demonstrate what he does best,” adding, “With both the FSS and the prosecution focusing their fire, one could say the legal risks for Woori Financial Group are only just beginning.”