Geoje-si Forms 'Excess Profit Recovery TF Team' for Half-Price Apartment Construction Project

[Asia Economy Yeongnam Reporting Headquarters Reporter Lee Sang-hyun] Geoje City, Gyeongnam Province, announced on the 28th that it has formed a dedicated TF team to review the entire project and recalculate whether there is any excess profit in relation to the 3 million won range apartment construction project, which has recently raised suspicions in the local community.

The establishment of the TF team is a measure in line with Mayor Byeon Gwang-yong's commitment announced at a press conference on the 19th to conduct a recalculation through a professional accounting firm and to recover any excess profits exceeding 10%.

The 3 million won range apartment project, a pledge project of the previous mayor during the 5th local government term, began in 2013 with the purpose of supplying rental half-price apartments to homeless low-income citizens.

During the development process, the city and the project operator, Pyeongsan Industry, signed an agreement to limit the profit rate to within 10% after project completion and to recover any profits exceeding this limit.

The agreement stated, "The settlement will be made based on the audit report from the operator's external accounting firm, and if profits exceed 10%, the excess amount will be recovered by Geoje City."

However, in the audit report submitted by the operator to the city in November 2018, the profit was reported to be below 10%, and the city's verification through a separate accounting firm also showed profits below 10%, making recovery impossible.

Since the agreement, which is the basis for recovering excess profits, stipulates that profits are to be settled through the operator's external accounting firm's audit report, and the audit report confirmed that excess profits were within 10%, recovery was not possible.

Nevertheless, as controversies regarding preferential treatment, corruption, and excess profit settlement related to the project continued, the city requested an investigation by judicial authorities on September 9 into preferential treatment and corruption involving Pyeongsan Industry, the external audit accounting firm Bukyung Accounting Firm, and the city officials responsible for the project at that time.

Along with this, the city plans to select an objective and independent professional accounting firm through the TF team to recalculate the project's profit rate to determine whether excess profits are subject to recovery.

Mayor Byeon said, "The truth of the suspicions related to the 3 million won range apartments will be revealed through the judicial investigation and the accounting firm's recalculation of project profits, and responsible measures will be taken accordingly. If the recalculation shows that excess profits exceed 10%, we will actively recover them and return them to the citizens."