Financial Supervisory Service General Staff Also Inspected by Blue House Civil Affairs...Reviewing Regulations Reveals 'Overstepping Inspection' (Comprehensive)

Cheong Wa Dae Civil Affairs Office's Audit of FSC General Staff Sparks 'Overreach' Controversy
Initial Public Operation Rules of Public Inspection Team State 'Only Presidential Appointees'
People's Solidarity for Participatory Democracy: "Civil Affairs Office May Overstep in Audit and Investigation"
Cheong Wa Dae: "Cannot Confirm Details Regarding Civil Affairs Office Audit"

[Asia Economy Reporter Song Seung-seop] In early February last year, officials from the Blue House Civil Affairs Office visited the Financial Supervisory Service (FSS). A five-day on-site investigation was conducted under the pretext of inspecting the FSS. The inspection was carried out extensively over four months. During this process, it was confirmed that even employees not subject to the inspection were investigated, sparking controversy over overstepping authority. The Blue House and civic groups even went to court over information disclosure issues.

With the court siding with the civic groups, the Blue House is expected to face intensified controversy over the 'overstepping (越權) inspection' as it disclosed related regulations. This is because evidence supporting claims that the Blue House violated regulations has emerged. Criticism is being raised that the government abused public authority by conducting broad inspections on unauthorized targets.

The Civil Affairs Office Inspected Regular Employees, but Regulations Limit to 'Presidential Appointees Only'

According to the 'Public Official Inspection Team Operation Regulations' obtained by Asia Economy on the 26th through an information disclosure request to the Blue House Presidential Secretariat, the document covers the composition, principles and procedures, work performance standards, and work attitude management of the Public Official Inspection Team across 5 chapters and 21 articles. Until now, the operation regulations of the inspection team had only been disclosed in seven items through the higher-level Presidential Secretariat Organization Regulations. This is the first time detailed contents have been made public.

The dominant interpretation behind the Civil Affairs Office's inspection is the large-scale redemption suspension incidents involving overseas interest rate-linked derivative-linked funds (DLF) and Lime Asset Management's private equity funds. It is claimed that since many victims emerged due to incomplete sales by private financial companies, the inspection aimed to verify whether the FSS, responsible for financial examination and supervision, fulfilled its duties.

The problem is that inspections were conducted even on regular employees who were not subjects of the inspection. The Civil Affairs Office, an organization under the Presidential Secretariat, is subject to the Public Official Inspection Team Operation Regulations. The scope of inspection work is stipulated in Chapter 3, Article 7. According to this article, the Public Official Inspection Team performs inspection duties related to 'high-ranking public officials belonging to the executive branch appointed by the President or heads and executives of public institutions and organizations appointed by the President.' Inspections on others fall outside the scope of work. Even if corruption tips outside the scope of Article 7 are discovered, they must be reported to the Anti-Corruption Secretary, and if the matter is significant, it should be referred to the relevant agency or investigative/audit institutions.

Former Financial Supervisory Service Governor Yoon Seok-heon. Photo by Yoon Dong-joo

According to materials submitted by a Financial Supervisory Service official to Yoon Chang-hyun, a member of the National Assembly's Political Affairs Committee from the People Power Party, the FSS official stated, "The inspection team members insisted on continuing the inspection for five days, presenting documents that appear to be the Civil Affairs Office's operational rules stating 'inspection authority also applies to FSS employees,'" and added, "We cooperated by providing office space and allowing them to stay, believing it was a lawful procedure."

This sparked controversy over whether the Civil Affairs Office could conduct inspections on executives and employees not appointed by the President. Yoon Seok-heon, the former head of the FSS at the time, also strongly raised suspicions in public. On July 29 last year, when he appeared before the National Assembly's Political Affairs Committee, former Director Yoon claimed, "The staff members are not subjects of the (Blue House) inspection."

People's Solidarity for Participatory Democracy: "Civil Affairs Office Risks Overstepping Scope with Audit and Investigation Interference"

As suspicions grew, the civic group People's Solidarity for Participatory Democracy's Administrative Monitoring Center requested the Blue House last September to disclose the 'Public Official Inspection Team Operation Regulations' and the 'Guidelines on Collection, Analysis, and Management of Digital Data.' The Blue House refused disclosure, citing that releasing the regulations could significantly hinder the performance of inspection duties. The civic group filed an administrative lawsuit against the Presidential Secretariat Chief to cancel the refusal of information disclosure.

In both the first trial in April and the second trial last month, People's Solidarity for Participatory Democracy won. The Seoul Administrative Court, which handled the first trial, ruled, "Each piece of information in this case relates to audit and supervision matters, but there is no reasonable ground to consider that disclosure would cause significant hindrance to the fair performance of duties." The second trial also ruled similarly, noting that disclosure would enable public oversight and control over whether affiliated public officials comply with regulations.

Article 11 of the Presidential Secretariat Public Service Inspection Team Operation Regulations (Referral Processing).

On the day the related regulations were disclosed, the Administrative Monitoring Center of People's Solidarity for Participatory Democracy strongly raised issues regarding Article 11 (Referral Process). Article 11 consists of four clauses. Clause 2 specifies that if corruption tips outside the scope of work are obtained, they must be reported to the Anti-Corruption Secretary, and if the matter is serious, it can be referred to investigative or audit agencies.

The problem lies in Clauses 3 and 4. Clause 3 stipulates that for confirmed misconduct or serious matters reported under Clause 2, the Anti-Corruption Secretary must report to the Civil Affairs Secretary. Clause 4 allows the Public Official Inspection Team to check the progress of investigations or audits even if the matter was referred or investigation requested under Clause 2. This raises concerns that the Blue House can effectively know about tips and corruption unrelated to the inspection targets defined in Article 7.

A representative from People's Solidarity for Participatory Democracy said, "I don't understand the point of checking investigation progress again after referring matters outside the inspection scope," and added, "There needs to be a discussion about what information the Civil Affairs Office can confirm."

Regarding this, a Blue House official stated, "We cannot confirm details related to the Civil Affairs Office's inspection."