Woori Bank may have withdrawn from urban project after suspecting illegality

[Photo by Lee Chung-woo]

South Korea’s Woori Bank has been confirmed to have made a decision not to take part in the controversial urban development project in Daejang-dong in Seongnam, Gyeonggi Province, after learning that the project outline at the time in 2015 was designed to give excessive profits to certain individuals.

Maeil Business Newspaper has learned on Wednesday that the Seoul Central District Prosecutors’ Office has recently secured an internal report from Woori Bank concerning the issue and is looking into the reason why the lender withdrew from the project consortium that was led by Hana Bank.

Woori Bank has reportedly expressed via media sources that it did not take part in the so-called Daejang-dong project in accordance with its internal regulations under which loans are prohibited for urban development projects.

Maeil Business Newspaper, however, has learned that the reason was not because of the internal regulation but Woori Bank may have been aware of the project’s potential illegality.

The prosecution has been questioning whether internal regulations banning loans for urban development projects were the genuine reason behind the bank’s withdrawal from the consortium. The prosecution’s reasoning is that the bank would not have needed to sit down with parties from the development project nor needed any submission of a letter of intent for loans if the bank’s internal policy did not allow such loans from the start.

The latest access to the bank’s internal report is believed to be able to provide a fresh lead in the case.

The report is known to have stated that there were structural issues concerning the potential returns from the project such as excessive profits going to certain groups. Hana Bank, which was leading the consortium, was reportedly not willing to state clearly who those were.

The report reportedly concluded that the project posed a reputational risk to Woori Bank and that it withdrew from the project.

The Daejang-dong project named after the neighborhood in Seongnam has been in the spotlight for years after suspicions over illicit activity raised during the presidential elections in 2017. The project allegedly involves then-candidate Lee Jae-myung.