Ex­im­bank un­der po­lice in­ves­ti­ga­tion for bribery

The Korea Times - - FINANCE - By Park Jae-hyuk [email protected]­re­atimes.co.kr

The Ex­port-Im­port Bank of Korea (Ex­im­bank) has been un­der po­lice in­ves­ti­ga­tion over the past two months for bribery charges against its em­ploy­ees, ac­cord­ing to the Seoul Metropoli­tan Po­lice Agency’s spe­cial crim­i­nal in­ves­ti­ga­tion di­vi­sion, Sun­day.

The em­ploy­ees were al­legedly en­ter­tained by se­cu­ri­ties firms in ex­change for se­lect­ing them as lead man­agers for the state-run bank’s is­suance of bonds de­nom­i­nated in for­eign currencies.

When fi­nan­cial in­sti­tu­tions is­sue for­eign bonds to se­cure key currencies, such as the U.S. dol­lar, the euro and the Ja­panese yen, bro­ker­ages and banks se­lected as lead man­agers are sup­posed to at­tract for­eign in­vestors, us­ing their wide in­vest­ment net­works in each coun­try.

Ex­im­bank has mostly se­lected for­eign bro­ker­ages and banks as lead man­agers for its is­suance of for­eign bonds.

Given that lead man­agers have re­ceived a 0.3 per­cent com­mis­sion on the amount is­sued, bro­ker­ages and banks have com­peted fiercely for the job.

Be­tween Jan­uary 2014 and De­cem­ber 2018, Ex­im­bank is­sued for­eign bonds col­lec­tively worth 25.9 tril­lion won ($22.3 bil­lion) and gave 76.8 bil­lion won to lead man­agers.

In July, how­ever, the Board of Au­dit and In­spec­tion (BAI) said it dis­cov­ered that the state-run bank had ma­nip­u­lated eval­u­a­tion sheets dur­ing the pe­riod, as it had se­lected lead man­agers in ad­vance of the eval­u­a­tion.

Ac­cord­ing to the BAI, the Ex­im­bank work­ers in charge of the se­lec­tion process went to in­vestor road­shows in New York, Lon­don and Hong Kong with em­ploy­ees of bro­ker­ages that hosted the events.

The Ex­im­bank work­ers promised to the bro­ker­ages there that the state-run bank would se­lect those bro­ker­ages as lead man­agers for the forth­com­ing is­suances of for­eign bonds.

The BAI urged Ex­im­bank to pun­ish the em­ploy­ees.

In ad­di­tion, the watch­dog gave rel­e­vant ma­te­ri­als to the po­lice in

Septem­ber, sus­pect­ing the Ex­im­bank em­ploy­ees of get­ting il­le­gally en­ter­tained by bro­ker­ages when they were in for­eign coun­tries.

Since then, the po­lice have in­ves­ti­gated the bank to find out whether or not the ac­cu­sa­tion is true.

The po­lice doubt that bribes al­lowed un­der­per­form­ing bro­ker­ages to be se­lected as lead man­agers.

If the sus­pi­cion turns out to be true, it means Ex­im­bank has over­paid lead man­agers, de­spite the is­suance of for­eign bonds un­der un­fa­vor­able con­di­tions.

“In ac­cor­dance with what the BAI said, we fin­ished re­form­ing our sys­tems and pun­ish­ing the em­ploy­ees in­volved in this is­sue,” an Ex­im­bank of­fi­cial said. “We will also co­op­er­ate with the po­lice in­ves­ti­ga­tion as much as we can.”

Bang Moon-kyu Ex­im­bank CEO

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