[Reporter’s Notebook] ODA Budget Disappears Amid Unsubstantiated Suspicions Involving Kim Keonhee

'Kim Keonhee and Cambodia'.

An Official Development Assistance (ODA) project, known as the Private Cooperation On-Lending Program, was scrapped after Cambodia and First Lady Kim Keonhee became linked to it. The government had spent more than five years preparing for this ODA project. In the second supplementary budget, the National Assembly, taking the initiative, cut the entire budget for the Private Cooperation On-Lending Program. Not only the Cambodia project, but also the Indonesia project was eliminated for the same reason: both were part of the Private Cooperation On-Lending Program. Government officials expressed regret, stating, "It has become virtually impossible to resume this project during the current administration's term."

The Private Cooperation On-Lending Program is not simply a budget for giving away money to developing countries. It involves domestic financial institutions lending a certain amount of funds to local financial institutions in developing countries, which then re-lend the money to support industries related to health and climate. The money is eventually repaid. In fact, there is a significant indirect benefit in that it also helps domestic companies enter local markets.

A government official familiar with ODA explained, "Through the On-Lending Program, the recipient country can use the funds borrowed from Korea to purchase infrastructure or materials produced locally by Korean companies." The official added, "For example, Hyundai Motor is strengthening its electric vehicle production business in Southeast Asia, including Indonesia, through ODA." Although it is technically aid, the program is designed so that Korea does not incur any losses.

The Organisation for Economic Co-operation and Development (OECD) has recommended that Korea expand support for the private sector in developing countries. In fact, major donor countries such as Germany, France, and Japan have already been expanding ODA through financial institutions. In June, the International Monetary Fund (IMF) reported in 'The Poorest and Most Vulnerable Are Being Left Behind' that capital flows to developing countries have plummeted since the COVID-19 pandemic, and that advanced economies should step up fiscal support and encourage greater participation from private investors. The report also called for the development of support structures that enable the continued inflow of risk loans and private investment.

The Private Cooperation On-Lending Program came under attack in the National Assembly as being "unidentified," and disappeared without sufficient defense amid political pressure. It became connected to suspicions that a key Unification Church official delivered a diamond necklace, Chanel bag, and other gifts to First Lady Kim Keonhee through Jeonseongbae, known as Geonjinbeopsa, to support the Unification Church's Mekong River development project in Cambodia. The reason was the alleged use of ODA funds earmarked for Cambodia. However, there was no thorough examination of whether the structure actually allowed or intended for the funds to be used for the Unification Church's Mekong River project. The fact that, according to OECD guidelines, religious facilities are excluded from ODA support was not sufficiently emphasized. The 25 billion won budget for Indonesia was also cut. While budget verification is necessary, it is unfortunate that a solid project disappeared based solely on suspicions related to the previous administration.