After Half-Price Shopping at Gun Mart, Reselling at Market Price for Huge Profits... "Hard to Prevent or Punish"

No Clause Prohibiting "Resale of Military Mart Products"
Board of Audit and Inspection Notifies Ministry of National Defense to Establish Regulatory Measures

Companies that purchased products cheaply from military marts, welfare facilities for soldiers and veterans, and then resold them through online shopping malls were caught. On the 4th, the Board of Audit and Inspection (BAI) revealed in its regular audit report of the Ministry of National Defense that "resale companies were confirmed to have purchased products in bulk through military mart users or employees of supply distribution companies and sold them on the market."

Companies that purchased products cheaply from military marts, welfare facilities for soldiers and veterans, and then resold them through online shopping malls were caught. On the 4th, the Board of Audit and Inspection stated in its regular audit report of the Ministry of National Defense, "It was confirmed that resale companies purchased products in bulk through military mart users or employees of supply distribution companies and sold them on the market." Asia Economy

According to the BAI, Company A purchased military mart products worth 420.35 million KRW from children of national veterans eligible to use the military mart over two years from April 2022 to April last year and resold them. Company B bought 4,320 products from employees of distribution companies supplying the military mart between January and February last year at a unit price of 30,310 KRW and sold them on 27 general shopping malls at prices ranging from 38,000 to 42,000 KRW each. The reason these companies could make excessive profits is that the military mart currently sells goods based on prices discounted by a certain rate from the lowest market price. According to BAI data, as of last year, the average discount rate for 520 items supplied to the military mart reached 55.2%, making prices about half of those in the market.

In this audit, the BAI identified that as of April last year, more than 28 resale companies were reselling and distributing military mart products without sanctions. Accordingly, the BAI notified the Ministry of National Defense to establish regulations that can control the act of securing products sold at military welfare facilities such as marts and reselling them on the market. In response, the Armed Forces Welfare Agency requested open market companies to sanction resale companies but received replies stating that "there is no basis to prohibit the resale of military mart products, so sanctions are impossible." This is because there are no provisions in the Military Welfare Basic Act, etc., that prohibit the resale of military mart products. The BAI explained, "The methods by which resale companies secure military mart products are becoming more diverse," adding, "It is difficult to control in advance because the ways resale companies secure military mart products are very diverse, including collusion with military mart managers and sales staff and diverting military mart products through distribution company employees."

Furthermore, the BAI uncovered that the Ministry of National Defense and each military branch operated executive personnel quotas beyond approved limits without authorization from the Ministry of the Interior and Safety. It also revealed that electromagnetic pulse (EMP) protection facilities and surveillance drones were underperforming and frequently malfunctioning. In this audit, the BAI detected a total of 19 illegal and improper cases and issued judgments, warnings, correction requests, and notifications to related agencies such as the Ministry of National Defense headquarters and the Joint Chiefs of Staff.