[2023 National Audit] Controversy Over Ministry of SMEs R&D Budget Cuts... Completion of Disaster Relief Fund Recovery 대상

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At the National Assembly's Industry, Trade, Small and Medium Enterprises and Startups Committee hearing on the Ministry of SMEs and Startups (MSS) held on the 12th, the issue of next year's budget cuts for small and medium-sized enterprises (SMEs) research and development (R&D) emerged as a major point of contention. The MSS announced a large-scale audit of Public Home Shopping. It was also revealed that the setting of targets and amounts for the recovery of disaster relief funds for small business owners is in its final stages.

Lee Young, Minister of SMEs and Startups, is responding to a lawmaker's question at the National Assembly's Industry, Trade, Energy, SMEs and Startups Committee audit held on the 12th.
[Photo by Yonhap News]

During the first questioning session in the morning, Jeong Il-young, a member of the Democratic Party of Korea, pointed out that while the government's overall R&D budget for next year was cut by 16.6% compared to this year, the R&D budget cut rate for SMEs was even higher at 25.4%. Jeong said, "To support SMEs and move toward the future, R&D investment and research must be conducted," adding, "Cutting R&D funds so drastically is problematic."

Hong Jeong-min, another Democratic Party lawmaker, expressed concerns that the significant R&D budget cuts would cause direct and indirect damage to the venture and startup sectors. Hong criticized Minister Lee Young of the MSS, saying, "How can you call the market a venture investment enthusiast after cutting 450 billion KRW from next year's R&D budget? The R&D budget for startup growth technology development was cut by 94.4%, and the global startup technology development R&D was completely eliminated; these budgets are all connected to ventures and startups." He continued, "R&D support for early-stage companies drives technological innovation in ventures and startups and sends positive signals to the market. Cutting the budget like this and sending negative signals to the market is very dangerous."

Kim Seong-hwan, a Democratic Party member, even suggested a 'Cheongong intervention theory' regarding the MSS R&D budget cuts. During his questioning of Minister Lee, Kim displayed a video image of a lecture by Cheongong. In the video, Cheongong claimed, "Our country does not need scientists," and "If you look at the reports that Western countries have diligently researched and presented, they are already scientists."

Kim said, "Many citizens suspect that the R&D budget cuts started after the president, influenced by Cheongong, mentioned the so-called 'R&D cartel crackdown' at the National Fiscal Strategy Meeting held on June 28," and asked, "What does the minister think about the blanket 25% cut regardless of the necessity of the projects?"

In response, Minister Lee said, "The need to improve R&D has been an agenda for more than 10 years," adding, "The goal is not to reduce the R&D budget but to reform the R&D execution system, which is a necessary situation."

Minister Lee Young of the Ministry of SMEs and Startups (center) is listening to questions from lawmakers at the National Assembly's Industry, Trade, Energy, SMEs and Startups Committee audit held on the 12th.
[Photo by Yonhap News]

During the hearing, Minister Lee also mentioned a large-scale audit of Public Home Shopping. According to materials submitted by Kwon Myung-ho, a member of the People Power Party, among about 20 executives and employees disciplined in December 2018 for 'unfair equity investment-related stock trading,' 10 were promoted. One and a half years after the disciplinary action, in June 2020, four were promoted, and in December 2021, three more were promoted. In March of this year, three employees were promoted to department head and manager positions.

Kwon criticized, "It is problematic that employees disciplined and pointed out for illegal stock trading acts at the last audit are still occupying key positions," adding, "I pointed out that they continue to be promoted, and this year, three of those employees were promoted again."

Controversy also arose over Cho Seong-ho, CEO of Public Home Shopping, mobilizing about 40 employees for his father's funeral and paying a total of 5.1 million KRW in travel expenses using company funds. Minister Lee responded, "All the travel expenses paid have been fully recovered," and added, "We are conducting a large-scale audit of Public Home Shopping and will hold those responsible accountable."

It was confirmed that the setting of targets and amounts for the recovery of disaster relief funds for small business owners is in its final stages. Minister Lee explained, "The confirmation of recovery targets and amounts is almost complete." However, no recovery plan has been decided yet. When Lee Jong-bae of the People Power Party asked, "Is there a recovery plan being pursued?" Minister Lee replied, "There is nothing concrete yet."

Additionally, Minister Lee stated that he currently has no plans to run in next year's general election.