Board of Audit and Inspection: "MBC Invested in US Resort Without Board Approval, Incurring Full Loss of 10.5 Billion Won"

"Domestic Real Estate Investment Also Faces Uncertain Principal Recovery"

[Image source=Yonhap News]

An audit revealed that MBC engaged in reckless management by investing 10.5 billion KRW in a U.S. resort development project in 2019 without board approval, resulting in a total loss, and by proceeding with investments in new financial products without risk management regulations.

On the 11th, the Board of Audit and Inspection released an audit report related to the "National Audit Request on the Neglect of Management and Supervision of MBC's Reckless Management by the Korea Broadcasting Culture Promotion Foundation (KBCPF)."

According to the audit results, in 2019, MBC's executive meeting decided to actively manage 484.9 billion KRW from the sale of its headquarters building and invested a total of 190.5 billion KRW in ultra-high-risk financial products, specifically domestic and overseas real estate alternative investment products, without board approval. As a result, the resort fund investment incurred a total loss of 10.5 billion KRW, and the principal recovery for other domestic and overseas real estate alternative investments was found to be uncertain.

MBC invested 3.3 billion KRW in the broadcasting rights for the Major League Baseball (MLB) World Tour and prepaid the entire investment amount. However, when the MLB World Tour was canceled, only 1.47 billion KRW was refunded. Notably, in January last year, MBC reported plans for other sports broadcasts, including the Beijing Winter Olympics broadcast (broadcasting rights fee of 3.77 billion KRW), to KBCPF, but it was confirmed that the outstanding amount of 1.83 billion KRW was omitted.

Additionally, MBC’s affiliate MBC Plus initiated an indoor sports theme park project in Yeosu in May 2018. Despite delays in facility installation by the joint business partner, MBC Plus failed to take appropriate measures and paid 1 billion KRW annually in rental fees for unused facilities while the park remained unopened. Furthermore, MBC Plus independently acquired the business rights from the joint partner despite the project not progressing, but ultimately the facilities were not installed, and the project was halted, resulting in an estimated loss of at least 7.4 billion KRW to a maximum of 8.8 billion KRW.

Despite cumulative deficits, MBC Art increased employee wages and abolished the wage peak system in 2022.

The Board of Audit and Inspection stated, "KBCPF neglects related duties by either leaving MBC’s failure to take actions according to the 'MBC Management Guidelines' unaddressed or merely receiving management information from MBC without discussing necessary measures regarding six issues." It added, "We have urged KBCPF to thoroughly perform related duties such as management and supervision of MBC’s operations under the KBCPF Act and the Commercial Act, including systematically inspecting the implementation of follow-up measures based on the KBCPF board’s decisions."