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| DGB Financial Group Chairman Kim Tae-oh attends a meeting of financial group chiefs and the Financial Supervisory Service (FSS) governor held in Seoul, Nov. 3, 2021. Newsis |
By Anna J. Park
The ongoing legal procedures surrounding DGB Financial Group Chairman Kim Tae-oh ― who is facing charges of bribery and embezzlement ― are overshadowing investors' confidence in the regional financial giant's future.
At the first trial held late last week, Kim denied the allegation that he had paid a broker $3.5 million in 2020 as a bribe for Cambodian financial officials to obtain a commercial banking license for the financial group's banking subsidiary, Daegu Bank, in the Southeast Asian country.
Prosecutors indicted Kim, along with three other key officials of the financial group, without detention last December on charges of bribery and corruption. The four defendants are alleged to have given the money to the Cambodian broker between April and October 2020, with plans to bribe Cambodian government officials in exchange for the bank's commercial license.
The four defendants also face embezzlement charges. They allegedly forged the bank's financial documents in May 2020, inflating the necessary cost of a real estate purchase in Cambodia so that they could secure the money for the bribe.
This case was the first time prosecutors indicted Korean nationals on charges of violating the Act on Combating Bribery of Foreign Public Officials, which is a locally implemented law from the OECD Anti-Bribery Convention, to which the Korean government signed onto in December 1997.
Upon prosecutors' indictment of Kim late last year, civic organizations have been urging him to step down from his post.
"The irregularities by Chairman Kim as well as other former and incumbent key officials of the group not only constitute serious violations against the financial group's ethics code, but also entirely destroyed the group's anti-corruption management system that all subsidiaries of the financial group have been striving to establish," a statement by the Daegu Citizens' Coalition for Economic Justice read, stressing that Chairman Kim should resign from the post immediately.
However, DGB Financial urged caution before making what it called hasty judgments on the matter.
"The trial is currently ongoing, and all the charges still remain as allegations, which are open to legal dispute in the court. Thus, we hope people refrain from judging the situation hastily with exaggerated perspectives," an official from the financial group told The Korea Times, adding that the group is closely monitoring the situation.
Meanwhile, the Korea Corporate Governance Service (KCGS) is closely monitoring the circumstances surrounding the DGB Group chairman. The KCGS gave the financial group the highest grade of A+ for its ESG efforts in 2020 and 2021.
"If the allegations brought up in the trial turn out to be true, then it could be a significant factor to lower the ESG grade. However, the court ruling hasn't come out, and we're currently watching the situation," a KCGS official said.
As any corrections to the grade are made every January, April, July and October, it is expected that DBG will maintain its highest grade until April. The group could face a downgrade afterwards, depending on the court proceedings.
