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| Asia Trust CEO Bae Il-kyu |
The financial regulator is set to punish Asia Trust for a lax governance system under which an employee was able to use the trust's legal seal last year to steal investors' money.
The Financial Supervisory Service (FSS) said Wednesday that an Asia Trust manager conspired with a constructor to embezzle 40 billion won ($35.4 million) worth of the investors' funds.
Believing the firm's lax internal monitoring system was one of factors in the case, the agency said Asia Trust is likely to face a heavy penalty.
"The FSS has almost concluded its investigation," an official said. "However, the level of punishment has yet to be decided upon. I understand Asia Trust is taking legal action in the case. The penalty level will be decided as soon as the result comes out."
In a bid to prevent similar incidents from happening, the FSS also summoned internal auditing officials of the nation's real estate trusts to request they strengthen their internal monitoring system.
Some local media claim the case could negatively influence Shinhan Financial Group's plan to acquire Asia Trust, but the FSS denied this.
"This won't legally affect the takeover," said an FSS official.
"I believe this could rather be a good opportunity for Shinhan to look into possible risks before the takeover. I understand Shinhan is also working on its own plan to strengthen Asia Trust's internal governance system."
In October, Shinhan Financial announced that its board had decided to acquire the nation's sixth-largest real estate investment trust firm.
It said it will first buy a 60 percent stake in the trust for 193.4 billion won and then decide later whether to acquire the remaining shares after 2022.
