Conflict of Interest Violation Case Review
1,391 Cases of Fraudulent Private Contracts
Contracts Signed Without Equity Disposal
Poor Submission of Private Business Details
Over the past two years, public institutions have entered into private contracts with companies owned by local council members and their families in approximately 1,300 cases. Concerns have been raised that the conflict of interest prevention system in local councils is being poorly managed.
The Anti-Corruption and Civil Rights Commission (ACRC) announced on the 27th the results of an inspection conducted from July 2022 to last August on violations of the Conflict of Interest Prevention Act across 20 local councils.
The inspection revealed a total of 2,318 suspected violation cases in the 20 local councils. Among these, 1,391 cases involved improper private contracts with companies owned by local council members and their families. The total contract amount was approximately 3.1 billion KRW. According to the current Conflict of Interest Prevention Act, local governments and public institutions audited by local councils are prohibited from entering into private contracts with companies owned by local council members.
Among the improper private contracts, cases involving contracts with special-related business operators in which local council members or their families held shares accounted for 18.6% (259 cases). The contract amount was about 1.78 billion KRW. Most cases involved changing the representative to another person at the start of the council member’s term without disposing of shares, followed by entering into private contracts. There were also 176 cases where standing committees spent meal expenses at companies owned by local council members under the pretext of official council activities. Approximately 58 million KRW was spent solely on meal expenses.
There were also numerous indications that local council members submitted incomplete records of their private business activities prior to their term start. According to the ACRC inspection, out of 518 local council members, 308 either did not submit or submitted incomplete activity details. Under the Conflict of Interest Prevention Act, local council members must submit records of activities within three years prior to the start of their term. However, some council members failed to list companies in which they held shares, and local governments subsequently entered into private contracts with those companies.
The ACRC plans to conduct further investigations into suspected violations of the Conflict of Interest Prevention Act and proceed with follow-up measures such as disciplinary actions and fines. Additionally, the commission will revise the local council conflict of interest guidelines to strengthen management of special-related business operators connected to local council members and plans to distribute the updated guidelines in the first half of next year.
An ACRC official emphasized, "We will strengthen education and publicity to prevent recurrence of violations of the Conflict of Interest Prevention Act in local councils and support raising the level of integrity."
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