"Budget and Goheung-gun Project Management and Supervision Deficiencies"
Ganghwa County was found to have improperly supported private businesses with approximately 540 million KRW of local government funds while promoting cultural and tourism projects, and Yesan County excessively paid about 350 million KRW in project settlement funds, revealing that local governments poorly managed and supervised these projects.
On the 6th, the Board of Audit and Inspection (BAI) released an audit report on "Major Financial Investment Projects of Local Governments," stating that some local governments waste budgets by forcibly pushing projects in the cultural and tourism sectors that lack economic feasibility or urgency.
According to the report, Ganghwa County in Incheon Metropolitan City unjustly reduced the public development fund that a private business operator was supposed to pay during the Hwagaesan Monorail construction project. Additionally, the responsible public officials falsely reported to the county council to secure a budget of about 540 million KRW for construction costs.
Since September 2018, Ganghwa County has been promoting the tourism resource development project of Gyodong Hwagaesan and decided to proceed with the monorail construction entirely through private investment. Subsequently, in April 2021, it signed an implementation agreement with A, the monorail project operator.
A agreed to pay 3% of the "admission revenue" as a public development fund to Ganghwa County but submitted a petition to the county in August of the same year requesting a change to the implementation agreement, arguing that it was unfair to pay the fund even when admission losses occurred and that the scope of admission revenue?whether it referred to ticket sales or operating profit?needed clarification.
Two Ganghwa County officials falsely reported to the county council in October 2021 that the expected amount of the public development fund would remain the same even if the implementation agreement was changed. They then amended the agreement in December of the same year, secured about 540 million KRW for infrastructure construction costs, and directly carried out the construction, thereby granting preferential treatment to the private business operator.
In Yesan County, it was confirmed that the management and operation trustee of Naepo Bobusangchon overestimated management and operation expenses and omitted sales figures, yet the county negligently handled the settlement of entrusted management project funds, resulting in an excessive payment of approximately 350 million KRW in settlement funds.
In Goheung County, despite Jeollanam-do notifying to re-examine the necessity of the indoor swimming pool and healing seawater bath construction project, which had been promoted since August 2018 to improve resident welfare and attract tourists, the project proceeded without compliance. Furthermore, public official B abused authority by accepting illegal solicitations to enter into subcontract agreements with specific companies, and public official C neglected construction supervision by paying labor costs regardless of the progress rate.
Additionally, in Seoul, Samcheok, Geoje, and Boryeong cities, it was found that projects were promoted in violation of related regulations by distorting economic feasibility data to pass investment reviews or failing to fulfill conditions attached to investment review results.
The Board of Audit and Inspection stated, "Although 94.2% of local governments had a fiscal independence rate below 50% as of 2022, cases of budget waste by some local governments continue to occur." It added, "We have requested the Supreme Prosecutors' Office to investigate two Ganghwa County officials and one CEO of the Naepo Bobusangchon trustee in Yesan County, and sent investigative reference materials regarding one public official in Goheung County to the Supreme Prosecutors' Office."
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