"Government Administrative Investigations Still Burden Companies... Need for Improvement"

[Asia Economy Reporter Ki-min Lee] Concerns have been raised that the administrative investigations conducted by the government still impose a significant burden on companies and therefore need improvement.

According to a survey conducted by the Federation of Korean Industries targeting the top 1,000 companies by sales, 62.1% of respondents said that each administrative investigation they underwent in the past five years took more than one month on average, and 5.9% said it took more than three months. Additionally, 7.2% reported experiencing overlapping investigations from different government agencies on the same issue.

Although the government has restructured administrative investigations to reduce public inconvenience and burden, companies still feel the burden remains. Previously, in 2017, the government announced an innovation plan to reduce public inconvenience and burden, revising 175 out of 608 items across 27 ministries. However, when asked about the average duration of a single investigation by government agencies over the past five years, 56.2% responded that it took between one and three months. Those who said it took more than three months accounted for 5.9%, while 37.9% said it took less than one month.

There have also been cases where companies received overlapping investigations from two or more government agencies on the same matter. Among the respondents, 7.2% reported experiencing overlapping investigations in the past five years. By agency, the National Tax Service accounted for the highest proportion at 36.4%, followed by city halls at 22.7%, customs at 13.6%, and the Ministry of Environment at 9.1%.

Regarding the outcomes of government administrative investigations, 54.1% of respondents said they had experienced corrective orders, fines, or criminal charges. Notably, among companies that had experienced sanctions, 62.5% reported that more than 80% of their government investigations resulted in sanctions, indicating that administrative investigations could pose a significant burden on business management. Regarding business losses caused by government investigations over the past five years, the majority responded that losses were less than 1% of their annual sales.

When asked about the priority areas for improvement in government administrative investigations, the responses were as follows: prohibition of excessive document submission requests (38.4%), minimizing overlapping investigations through prior coordination between agencies (16.8%), shortening investigation periods and limiting the number of investigations (15.8%), and efficient operation of objection procedures (12.1%).

Yoo Hwan-ik, Director of Corporate Policy at the Federation of Korean Industries, stated, “From the perspective of the government or agencies conducting administrative investigations, each investigation may be just one case, but for companies that have to undergo multiple investigations, it inevitably becomes a significant burden. Since administrative investigations also have a regulatory effect, just like regulatory improvements, it is necessary to annually assess the situation and actively eliminate or revise unnecessary investigations to reduce the burden on companies.”