[2020 National Audit] Korea Technology Finance Corporation Suspected of Creating and Concealing Dual Real Estate Contracts

Choi Seung-jae, member of the People Power Party./Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Moon Hyewon] The Korea Technology Finance Corporation (KOTEC), under the Ministry of SMEs and Startups, has been suspected of drafting ‘double contracts’ while signing apartment lease agreements for its employees.

On the 26th, Choi Seung-jae, a member of the National Assembly’s Industry, Trade, Energy, SMEs and Startups Committee from the People Power Party, conducted a full survey of lease contracts for 55 nationwide ‘rental company housing’ locations operated by KOTEC. The results showed that in 43 cases, the key money deposits differed from the actual transaction prices by tens of millions of won to over 400 million won.

KOTEC can lease housing under its name up to a limit of 200 million won for employees at grade 4 or below with dependents, providing the housing for up to 15 years.

In fact, KOTEC leased a 25-pyeong apartment (supply area 83.28㎡, exclusive area 59.78㎡) located in Oksu-dong, Seongdong-gu, Seoul, for two years in 2018, paying a lease deposit of 19 million won. At that time, the actual transaction price was around 600 million won, and it is currently about 800 million won.

Therefore, Choi pointed out the need to verify whether the lessor gave preferential treatment to KOTEC or if employees intentionally drafted separate double contracts aside from the company-submitted contract.

KOTEC also admitted during the submission of materials to the National Assembly that in cases where the actual transaction price differed by tens of millions of won or more, employees might have entered into double contracts.

The problem is that employees submit a written assurance to KOTEC stating they did not enter into double contracts while receiving ‘rental company housing,’ and branch managers where the employees work have been inspecting the presence of double contracts and the appropriateness of surrounding market prices every six months.

If the drafting of double contracts is proven true, KOTEC would have been creating false documents for a long time, and employees would have systematically concealed the double contracts.

In particular, if the lessor is a rental business operator, there is a possibility that KOTEC, as a public institution, encouraged tax evasion.

Choi said, “The mere fact that a public institution drafted double contracts behind the scenes while signing lease agreements can provoke public outrage,” adding, “The existence of double contracts should be promptly verified, and if proven true, the long-standing moral blindness entrenched as a practice must be severely punished through an audit by the Board of Audit and Inspection.”