Leaking Management Fees, Mapo-gu Conducts Microscope Audit
229 Cases Detected in 10 Complexes Through Regular and Special Inspections
Misuse and corruption of apartment management fees continue without end. Photo by Jinhyung Kang aymsdream@
The A Apartment complex in Mapo-gu, Seoul, was caught in a Mapo District Office audit for manipulating over 5 billion KRW by repeatedly causing failed bids to funnel work to a single security service company and then awarding contracts through private agreements.
The residents' representative council and management entity of B Apartment were sued for failing to pay for the replacement of common water supply and hot water pipes after completing the construction work. They lost the lawsuit and ended up paying the construction fees, delayed interest, and legal costs from the long-term repair reserve fund. They were caught in the audit for misappropriating tens of millions of KRW in legal fees from the reserve fund without informing the residents.
In the case of the C complex, over 50 violations were detected during the audit, resulting in a series of fines and administrative orders from the district office.
On the 29th, Mapo-gu announced that it had uncovered 229 violations through audits of 10 apartment complexes in the district this year. Mapo-gu conducted regular audits on four complexes in the first and second halves of the year and additionally carried out special audits on six more complexes, revealing numerous issues.
The audit targets were complexes with long-term repetitive complaints, complexes with disputes among residents' representative councils, controversies over bidding for construction services, or complexes suspected of improper use of long-term repair reserve funds and management fees.
The audit team, composed of Mapo-gu officials and audit committee members selected by Seoul City, examined management practices in four areas: general management, budget and accounting, long-term repairs, and construction services. As a result, six out of the total 229 cases went beyond fines and administrative orders to criminal complaints and investigation requests.
A Mapo-gu official stated, “There were 105 issues related to construction services, 51 in general management, 49 in budget and accounting, and 24 violations in the long-term repair reserve fund area. In one complex, despite restrictions on consecutive terms for building representatives, they manipulated the system to maintain long-term control, depleting tens of billions of KRW from the long-term repair reserve fund and increasing the reserve collection amount without residents' consent.”
Mapo-gu explained that most of the problems revealed through the audit were found in large complexes with over 1,000 households. Several complexes are even engaged in lawsuits among residents' representative councils due to vested interests.
Mapo-gu increased its own budget to conduct microscopic audits because related complaints have not decreased. In recent years, the number of audits decreased due to the COVID-19 pandemic, which created opportunities for increased misuse of management fees and corruption. The lack of interest from apartment residents in complex management has also contributed to the rise in management fee corruption.
Although complexes pointed out in the audit are required to disclose related information to residents, it is common for them to hide the findings by briefly posting and then removing the notices from bulletin boards. Due to the frequency of such incidents, Mapo-gu revised and implemented from the 28th the ordinance (Seoul Special City Mapo-gu Ordinance on Audits of Apartment Management) requiring that audit results, including corrective actions, be notified to residents by mail or other means.
Park Gang-su, head of Mapo District Office, said, “Active interest and oversight from residents are necessary for transparent apartment management. We will continue thorough management audits next year to protect residents' rights and improve living standards.”
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