Severance Pay Is Illegal... 'Retirement Consolation Money' Is Legal [Leaking Donations]③

Hataekyung Paid Retirement Bonus of Over 160 Million Won
'Clearance Sale' Practice Leaving Account Balance at Zero Persists
Basic Principles Needed on Payment and Criteria
Choi Junseon: "Payment of Retirement Money Under Different Names Is a Violation"

Editor's NoteThe reason for abolishing district parties in the past was due to illegal political funds. Recently, the two major parties have been pushing for the revival of district parties. The prerequisite for the revival of district parties is the transparent use of political funds. What is the actual situation? Asia Economy requested information disclosure from the National Election Commission and regional election commissions and secured six months' worth of accounting reports before the expiration of the terms of 144 members of the 21st National Assembly. These individuals are now former lawmakers. Based on the secured data, we prioritized verification items by examining the appropriateness of expenditure purposes and usage locations. We confirmed with the parties involved and the election commission, and also conducted on-site reporting. We also uncovered the reality that the election commission does not properly verify accounting reports. We focus on verifying and reporting on the use of political funds by lawmakers at the end of their terms. ① Spending millions of won on office supplies at a kimchi factory logistics warehouse ② Used political funds for meals at Gangnam wine bars, hotels, and famous restaurants... 'Meetings = Gourmet tours?' ③ Retirement pay is illegal... 'Retirement consolation money' is legal

A significant number of 21st-term lawmakers who left the National Assembly due to term expiration paid encouragement money and retirement consolation money ranging from hundreds of thousands to several tens of millions of won to their aides and others at the end of their terms using political funds. They held a 'retirement pay feast' to spend all remaining political fund balances. Although there is no legal problem, the payment decisions and criteria vary, raising concerns that basic principles should be established.

According to the 'Accounting Reports of 21st Term Expired Lawmakers' obtained by Asia Economy through an information disclosure request to the National Election Commission, 56 out of 144 lawmakers nearing the end of their terms paid retirement consolation money and other encouragement money to aides and close associates. The payment rate was 38.8%, meaning about 4 out of 10 lawmakers nearing the end of their terms paid encouragement money through political fund accounts.

The lawmaker who paid the most retirement consolation money was former lawmaker Ha Tae-kyung. He gave a total of 166.38 million won to 11 aides. The chief secretary received about 23 million won in retirement pay and consolation money, aides and secretaries each received 24 million won in retirement consolation money, another secretary received 23 million won, and another secretary received 2 million won, with payments differentiated according to rank and length of service.

Former lawmaker Lee Yong-ho paid a total of 80.58 million won to nine people: 11 million won each to three people, 9 million won to one person, 5 million won each to three people, 4 million won to one person, and 19.58 million won to one person. Former lawmaker Kwon Myung-ho paid a total of 72 million won in retirement encouragement money to nine people at 8 million won each, and former lawmaker Jung Jin-seok paid a total of 56 million won in retirement consolation money to 14 people: 5 million won each to eight people, 3 million won each to four people, and 2 million won each to two people.

Additionally, former lawmaker Lee Sang-heon deposited a total of 55 million won to 10 people, including retirement encouragement money of 10 million won each to two people, 5 million won to one person, and encouragement money to seven people (5 million won each to six people and 500,000 won to one person). Former lawmaker Tae Young-ho paid a total of 48 million won to seven aides as performance bonuses, and former lawmaker Yang Geum-hee also gave a total of 48 million won to eight party officials.

The practice of so-called 'cleaning out'?where retiring lawmakers reduce their political fund account balances to zero?also continued. Instead of transferring remaining political funds to the party, they spend every last won on encouragement money and other expenses.

Former lawmaker Yoon Kwan-seok gave retirement consolation money ranging from 1 million to 5 million won to 10 aides, including the regional office chief, and paid the remaining balance of 778,583 won to his accounting officer as 'encouragement money.' Former lawmaker Oh Young-hwan also paid 1 million won each to three aides as retirement consolation money and then gave the remaining balance of 806,005 won to another aide, bringing the political fund account balance to zero. Former lawmaker Kim Woong did the same. He gave 330,000 won each to eight aides as retirement consolation money and gave 174,732 won to one aide. The remaining 37,000 won was used for a National Assembly issue-related meeting expense.

Is it legally problematic to pay retirement money to aides using political funds? Regarding this, the National Election Commission issued an interpretation in 2005 stating that "It is permissible for a lawmaker to pay ordinary encouragement money related to legislative support activities to their aides, secretaries, and assistants from political funds donated to their support committee." In other words, paying separate 'retirement pay' to special employees may be illegal, but payments in the form of encouragement or consolation money can be made within a certain range. However, there are no specific criteria for the scope of encouragement money payments. This is why the practice of retirement pay feasts to clean out political fund balances before term expiration continues.

For this reason, lawmakers paid the 'nominal' amount not as retirement pay but as 'retirement encouragement money' or 'consolation money.' Since aides (including interns) are eligible for government pensions or lump-sum retirement pay, receiving retirement pay through political fund accounts could constitute double benefits and violate the Political Funds Act. Article 2, Paragraph 3 of the Political Funds Act states, "Political funds must be spent only on expenses necessary for political activities and must not be spent on private expenses or used for improper purposes."

Former lawmaker Lee Yong-ho explained in a phone interview, "I paid encouragement money to aides who had worked with me for eight years in the region, considering factors such as length of service and whether they had started families, because I felt sorry as they were leaving. Before making payments, I inquired with the election commission and proceeded after receiving a response that there was no legal problem." Professor Choi Joon-seon, emeritus professor at Sungkyunkwan University Law School, said, "Regardless of what the payment is called, the law's intent is to prohibit similar payments, so paying retirement money under a different name can be seen as a violation in essence."