IBK under scrutiny over internal controls after major fraud case at China unit

The Industrial Bank of Korea (IBK) is facing scrutiny over its internal controls after its Chinese subsidiary lost 83.4 billion won ($60.3 million) due to financial fraud that allegedly went undetected for months. According to documents submitted Monday by IBK and the Financial Supervisory Service (FSS) to Rep. Shin Dong-wook of the People Power Party, IBK's Chinese subsidiary provided non-face-to-face loans to local borrowers in partnership with a non-bank financial institution. The financial institution used an online lending platform to recruit borrowers and collect loan repayments. Borrowers sent their repayments to an account designated by the platform, which was supposed to transfer the money to IBK. However, the platform allegedly changed the repayment account without authorization and diverted the money instead of sending it to IBK. It also allegedly falsified records to make it appear that borrowers had repaid their loans. As a result, some borrowers were marked as delinquent even after making their payments, while IBK failed to receive the money. The incident started in December