Prosecutors said Tuesday they secured evidence that a scandal-ridden savings bank has used slush funds to lobby ranking government officials and influential politicians to prevent financial regulators from ousting the bank due to illegal loans and other irregularities.

   The bank raised the slush funds by offering illegal loans worth trillions of won to more than 100 special purpose companies established to invest in real estate and construction projects, prosecutors said.

   They also found that a former senior official of the regulator tipped the bank off about information on upcoming inspections by the regulator and helped the chief of an affiliated bank retain his post despite his alleged involvement in stock-price rigging and offering of illegal loans.

   The former chief of the Financial Supervisory Service (FSS)'s non-bank inspection bureau, Yoo Byung-tae, was prosecuted with detention on influence-peddling charges that day.

   Yoo received a total of 210 million won (US$194,000) in bribes from the Busan Savings Bank in return for offering information and other favors, according to investigators from the Supreme Prosecutors' Office.

   The banking group has established more than 100 paper companies and created slush funds for lobbying, prosecutors said. It employed an official, identified only by his surname Kim, to manage the companies and ordered him to raise monthly bribes for Yoo through the firms, they added.

   The bank's executives, including bank chairman Park Yeon-ho already detained for illegal loans and other irregularities, offered kickbacks to Yoo regularly 55 times even after he stepped down from the FSS post in 2007 to exert influence on his successors, prosecutors said.

   In return, Yoo had tipped the bank off about information on inspections by the FSS and helped it prepare for them, prosecutors said.

   Yoo, when he was the FSS bureau chief, also allegedly helped Kim Min-young, the detained chief of one of the affiliated banks, maintain his position in 2003 and 2004 from dismissal when he was in trouble for participating in stock-price rigging and offering illegal loans. He was suspended from the post for six months thanks to Yoo's help, according to prosecutors.

   The Busan Savings Bank scandal has jolted the nation for months since the bank was accused of tipping off its employees' relatives and VIP customers about its impending suspension in February so as to help them withdraw their deposits in advance.

   The bank was later found to have engaged in extending illegal loans to large shareholders and other financial irregularities involving 7 trillion won in total, leading its chairman Park Yeon-ho and several major shareholders to be prosecuted last month.

   A Seoul court issued a warrant on Monday to prolong detention of Eun Jin-soo, a former state auditor and aide to President Lee Myung-bak, for allegedly taking bribes from the now-suspended bank in exchange for helping the bank avoid investigations by financial regulators. Eun was arrested early Monday and questioned over the allegations.

   "Crime charges have been laid out, and there are concerns of an attempt to run away and destruction of evidence," the court said as it issued the warrant.

   The ruling Grand National Party and main opposition Democratic Party agreed to launch a parliamentary investigation into the snowballing corruption scandal. (Yonhap News)