Everyone knows that I have a lot of money and a connection with Ronald.
Perhaps because of that, the investigation proceeded in a relaxed atmosphere. Unlike my previous interrogations, there were no threats or aggressive attitudes.
After five hours of questioning, I reviewed the records and stamped my approval.
“If we need further investigation, we’ll contact you again.”
“Yes, thank you for your hard work.”
As I left the prosecutor’s office, an investigator rushed up behind me.
“Excuse me! Kang Jin-hoo!”
I stopped in my tracks.
“Is there still something I need to answer?”
“Um, no, that’s not it…”
He hesitated for a moment before speaking.
“Not long ago, I put all the money from selling my house into Hoseong Savings Bank.”
But because of me, the bank’s operations were suspended, and now he couldn’t withdraw his money?
At first, I was angry, thinking he was just rambling, but throughout the investigation, I had consistently pointed out Hoseong Savings Bank’s insolvency.
Perhaps because he had been listening so closely, his expression was markedly more anxious than before.
“How much is it?”
“170 million won.”
“……”
That’s a significant amount of money even for those who are well-off. For a civil servant, it would be even more impactful.
It was probably a lifetime’s worth of savings, scrimping on food and clothing.
“If a problem occurs, how much do you think you could get back?”
He studied my face with trembling eyes. In his gaze was a mixture of a desperate plea for reassurance and a desire to know the truth.
How should I respond to him?
“You know, even in the worst-case scenario, you can get back 50 million won.”
“What about the 120 million?”
“You should assume that half of it will be lost.”
His expression turned pale at my words.
He might not realize it, but even this was a hopeful assessment. The chances of retrieving even half of that were slim to none.
“That… that’s impossible. What kind of money is that…”
Seeing his reaction, I sighed inwardly.
“Pray that I’m wrong.”
***
[Why should I apologize?]
(Kang Jin-hoo, summoned as a suspect for obstructing business by spreading false information, glared at the Joongilbo reporter who asked if he had any intention to apologize to the victims, and retorted, “Why should I apologize?” before walking into the prosecutor’s office.)
During the subsequent five-hour interrogation, Kang Jin-hoo vehemently denied the allegations but failed to provide any evidence to support his claims.
(Excerpt)
According to the prosecutor’s interim announcement, under continued pressure, Kang Jin-hoo admitted that he expected his statements would lead to a bank run. This suggests that his statements may have had ulterior motives.
The prosecutors stated they would summon Kang Jin-hoo again for questioning as soon as the audit of HoSeong Savings Bank was completed.
Taek-gyu handed me the newspaper.
“The photo turned out great. You should scrap this as a keepsake.”
The front page of Joongilbo featured a large photo of me glaring at the reporter, with the headline reading, “Why should I apologize?”
I was at a loss for words.
“These jerks are unbelievable.”
“Just bear with it. They must be feeling the pain of creativity, too.”
“……”
Since when did reporting become an art form?
How could they twist it to suit their own narrative like this?
I had merely looked over, so what angle did they shoot from to get that? Moreover, the follow-up statement about feeling regret for the victims and that the management and supervisory agencies should apologize was completely cut out.
The jja-jang-myeon and sweet and sour pork that Taek-gyu ordered arrived. I called Senior Sangyeop to the CEO’s office, and we all sat down together to enjoy the meal after a long time.
“Turn on the TV.”
As soon as I pressed the remote, my image appeared on the screen.
“Don’t you have any remorse for the victims? Just don’t walk in without saying even a word of apology!”
“Why should I apologize?”
Taek-gyu marveled as he paused from eating jajangmyeon.
“Wow! It’s a classic scene no matter how many times I see it!”
Senior Sang-yeop nodded in agreement.
“I saw that circulating on the internet too.”
“It even made the real-time search trends.”
“…”
I was beyond annoyed.
I switched channels. Other broadcasts were also reporting on the suspension of operations at Hoseong Savings Bank.
The president hadn’t mentioned it separately after the cabinet meeting, but the political world was ramping up its criticism day by day.
Members of the Korean Party took turns blaming me as if passing a rolling paper.
Especially, party leader Choi Myung-hwan was prominently featured in various news, loudly proclaiming that Hoseong Savings Bank was safe and that the country shouldn’t be shaken by a single fraud allegation.
Taek-gyu pointed at the screen, where Choi Myung-hwan was shouting with his face flushed red.
“Why is that guy overreacting like that?”
“Because Hoseong Savings Bank’s headquarters is in Choi Myung-hwan’s electoral district,” I explained.
“Ah!”
Senior Sang-yeop added, “He’s also considered a potential candidate for the next presidential election. I guess he’s trying to boost his recognition with this opportunity.”
Taek-gyu looked confused. “But what if it actually goes under? What’s he planning to do?”
Of course, the president and ruling party didn’t make such a fuss out of foolishness.
“He’s mistaking my raising alarm over minor issues as a public declaration.”
Is there any perfectly clean company? Banks are no exception. There are varying degrees of hidden problems, but they all conceal some level of financial instability.
It might be possible to raise issues with just that, but the government is the one conducting the investigation anyway. They are confident they can cover up any significant shortcomings on their end.
But what if it’s not just minor issues?
“There’s a common sense in the world; could you even imagine that the scale of a single savings bank’s insolvency would exceed hundreds of billions?”
If I hadn’t seen the forecasts, I wouldn’t have been so sure.
“Then couldn’t they just announce that there’s no insolvency?”
Sang-yeob senior shook his head at Taek-gyu’s comment.
“But Jin-hoo caused a bank run. For the time being, there will be more withdrawals than deposits, and if they try to resume operations, it won’t last long before it collapses.”
News articles continued to flow about Hoseong Savings Bank. This time, scenes of people gathering at the bank and the customers’ expressions were shown.
Seeing that, I couldn’t swallow my jjajangmyeon.
I put down my bowl and said, “I’m not sure if this was the right thing to do.”
What sin do those people have? They only entrusted their hard-earned money to the bank, believing in it.
If I had said nothing, they might have been living without worry.
Sang-yeob senior spoke up, “It was the right thing. Whether it’s a bubble or insolvency, if it’s going to burst, it’s better for it to happen quickly. That’s the way to minimize losses, even if just a little.”
If it’s their own money, companies can invest or speculate however they want, regardless of profitability.
However, the money that banks lend is not the bank’s money—it’s the customers’ funds. Banks merely act as intermediaries, connecting depositors and borrowers.
Therefore, when there are insolvencies in loans, it directly translates to damage for the depositors.
That’s why there are various regulations and oversight on financial capital.
Bank loans must adhere to established procedures and regulations, thoroughly verifying business viability and collateral before being granted.
But Hoseong Savings Bank completely disregarded these processes, created a special purpose corporation, approved loans, and the institutions that were supposed to manage and supervise them sat idly by.
In the meantime, the scale of the crisis has snowballed.
Park Si-hyeong was unknowingly nurturing cancer cells. And the characteristic of cancer cells is that they kill the host and perish together.
As I watched the news, I said,
‘By now, they must have slowly grasped the scale of the crisis.’
***
Finance is a system built on trust.
When that trust collapses and people can no longer trust banks, they all rush to withdraw their deposits. That’s what a bank run is.
Kang Jin-hoo induced a bank run with just a few words.
The president immediately classified it as a rumor, then reassured the public and launched an investigation into Hoseong Savings Bank.
The investigation period announced by the government was ten days.
During that time, the Financial Supervisory Service and the Korea Deposit Insurance Corporation completed intensive audits and field inspections, stating that they would resume operations.
Thanks to this, depositors felt relieved, and greater chaos did not ensue. This response was commendable in effectively preventing financial unrest early on.
The Financial Supervisory Service and the Korea Deposit Insurance Corporation conducted joint intensive audits and field inspections.
On the surface, Hoseong Savings Bank appeared to have no issues. Deposits and loan interest were steadily coming in, and cash flow seemed normal.
Some minor problems were visible, but they were within typical levels.
Initially, everyone thought the investigation would be completed quickly, and operations would resume soon. However, it didn’t take long for them to realize the situation was serious.
The accounting figures were completely manipulated; nothing matched the reality. While high-interest deposits continuously flowed out, loans were not being recovered on time.
In essence, they were using new deposits and subordinate bond issuance to pay interest on deposits. If cash hadn’t kept coming in, the situation would have been disastrous even without a bank run.
To secure cash flow, loans needed to be recovered.
Corporate loans and real estate collateral loans posed no major issues. There were some problems with personal credit loans, but the amounts were relatively small, and the ratio was below 10%.
The problem lay with the 150 special purpose companies.
The total amount loaned to these companies reached 5.1 trillion won. By calculation, this meant an average loan of about 34 billion won per corporation.
The loans had been made in an ad-hoc manner. The collateral consisted of just one piece of paper, and there were no proper feasibility assessments.
The loaned money was invested in various overseas projects, but most suffered enormous losses. There were even places that lost everything by investing in derivatives to cover already incurred losses.
Amid all this, expenses were continuously incurred. It appeared as if there was a competition to see who could siphon off money first.
The president of the special purpose corporation was a relative of the management team, and those relatives seated their own friends and acquaintances, paying them hefty salaries.
The role of the bank does not end with providing loans. They should have periodically inspected and monitored whether the funds were being used for their intended purpose, whether the collateral was stable, and whether any defaults were occurring.
However, since everyone was related or connected through mutual acquaintances, they merely received reports and extended loan maturities whenever requests came in.
It was impossible to even gauge the scale of the defaults. There were even several entities that had already shut down or were completely uncontactable.
The employees who came to investigate gave up their evenings and conducted a thorough investigation of the loans to ascertain the collateral value and recoverable amounts.
The results were shocking.
***
Park Si-hyeong, after receiving the report from Financial Supervisory Service President Cha Jong-ho, asked again,
“What did you say? How much?”
Cha Jong-ho repeated,
“The amount confirmed so far is 3 trillion won.”
At first, Park wondered if he had misheard. Was it possible that a zero was misread, turning 300 billion into 3 trillion? How could the default of a small savings bank amount to 3 trillion? Was this even realistically possible?
“Are you saying 3 trillion won? Not 300 billion or 3 billion, but 3 trillion?”
Despite the room not being particularly hot, beads of sweat poured down his forehead, yet Cha Jong-ho didn’t even consider wiping them away.
Regaining his composure, Park said sternly,
“What has the Financial Supervisory Service been doing for it to come to this?”
“Well, um…”
The audits and inspections had amounted to little more than skimming through the ledgers and visiting a few companies that were granted loans. In fact, they were too busy entertaining visitors throughout the audit period.
The failure of the supervisory agency to meet its responsibilities largely fell on Park Si-hyeong himself.
Although Cha Jong-ho had a major in economics, he was an administrator with no relevant experience in finance. However, Park had built a connection with him during his time as the governor of Gyeonggi Province and later appointed him as the head of the Financial Supervisory Service due to his work in the election campaign.
Lack of expertise was equally true for the heads of the Audit Office and the Deposit Insurance Corporation. The head of the Audit Office graduated from the same university as the president, and the head of the Deposit Insurance Corporation merely attended the same church as the president.
“That, um, as of now, it’s 3 trillion won, but if we include things that haven’t even been verified, it could increase to 3.6 trillion.”
“…”
Now, he was so astonished that he could barely speak.
This was shaping up to be a historic scandal following Daewoo Group’s accounting fraud, and it was the largest scale of accounting fraud in a financial institution ever.
And this was all accomplished by a mere savings bank, not a general bank or a major securities firm!
wow, too bad jinhoo cannot make profit from this.
Straight up a ponzi scheme.
Go