韩国企业银行中国子公司83亿韩元级金融欺诈暴露内控缺陷，事发两个月仍未厘清损失

Weak internal controls worsened a financial fraud worth more than 80 billion won ($60 million) at the Chinese unit of Industrial Bank of Korea (024110.KS), a lawmaker said. The bank calls it fraud by an outside firm, but it failed to detect months of warning signs in its own checks. Its response — overhauling the repayment system only after the fraud came to light — has also drawn criticism.
According to materials submitted by the Financial Supervisory Service and IBK to Rep. Shin Dong-wook of the People Power Party, a member of the National Assembly's National Policy Committee, IBK's Chinese unit signed an agreement with a local non-bank financial firm, referred to as Company A, to make contactless loans to borrowers in China.
Company A handled borrower recruitment and principal-and-interest repayments through an online lending platform, Company B. While IBK disbursed the loans directly, the principal and interest repaid by borrowers passed through an account designated by Company B and were later settled with IBK.
The fraud occurred when Company B exploited this repayment structure. Company B arbitrarily changed the repayment account and diverted the principal and interest paid by borrowers instead of sending it to IBK. An investigation found that it processed false computer records making it appear that repayments had been made when no money was actually transferred.
In the process, borrowers who had paid off their debts were recorded as being in arrears or in default. They suffered debt collection efforts and damage to their credit scores, and IBK also failed to recover the principal and interest.
It is also questionable whether IBK's internal controls worked properly. In response to the lawmaker's inquiry, IBK said it compared and verified repayment records against actual deposits every day. In reality, however, it said it first became aware of the fraud only after settlement funds failed to arrive on June 24 and borrower complaints increased.
According to the FSS report, the fraud ran from December 1 last year to June 29 this year. The problem persisted for months, yet the bank failed to catch it in its own reviews.
Moreover, five Chinese financial institutions had already removed Company B from their lists of partner organizations in March and April. IBK, however, failed to pick up on these warning signs in time.
On the 15th of last month, IBK disclosed that the financial fraud amounted to 83.376 billion won. Yet about two months after becoming aware of the fraud, it still has not accurately determined the actual amount involved, the sum recovered or the expected losses. The bank says a local investigative agency is looking into the matter.
After the fraud occurred, IBK built a separate system that lets borrowers check their repayment amounts or repay early without going through Company B. Only after the fraud did it fix a structure in which it disbursed loans directly while relying on an outside platform to collect principal and interest.
The financial regulator's response has also been called lax. After the fraud was reported, the FSS moved to file internal reports, circulate the case and check whether the amount involved had changed. But it did not begin face-to-face verification with IBK officials, request additional materials or launch a written probe or on-site inspection.
The FSS says it will review the appropriateness of how the case was handled once IBK submits a closing report after cleanup, including the recovery of the losses, is complete.
"IBK handed out the loans directly but left the collection of principal and interest to an outside platform, and only after an 80 billion won fraud broke out did it build a direct repayment system," Shin said. "The weak internal controls at the overseas unit and the FSS's belated oversight, simply waiting for a closing report, are also serious problems."