It has been revealed that a staff member in charge of public relations at the Korea SMEs and Startups Agency (KOSME) designated a paper company he established as the public relations agency and embezzled approximately 2.9 billion won in company funds over six years by forging supporting documents.
According to a regular audit report released by the Board of Audit and Inspection on the 17th, Mr. A, an employee at KOSME who was responsible for executing public relations expenses, executed 7.5 billion won in public relations costs from February 2018 to June last year by contracting with either the paper company he operated or a media agency run by an acquaintance, Mr. B. This accounted for 41% of KOSME's total public relations expenses during that period.
Mr. A received internal approval for the advertising plan, which stated that the advertising tasks would be integrated through a media foundation. However, the advertising request submitted to the media foundation designated companies related to him as the media agency.
It was found that the agency designated by Mr. A often did not execute the contracted advertisements. By forging supporting documents, he deceived KOSME, the ordering party; the amount embezzled was estimated at 2.9 billion won.
The Board of Audit and Inspection requested the prosecution to investigate Mr. B on suspicion of fraud and demanded a warning against five employees at KOSME who neglected their duties regarding public relations expenses. Mr. A passed away last year, so no separate legal action was taken against him.
Cases were also identified where loans were extended without verifying the authenticity of contracts, causing losses of hundreds of millions of won to the institution.
Former KOSME executive Mr. C and others concluded a growth-sharing loan contract in March 2019 to acquire convertible bonds from Company D, a supplier of electric trucks, supporting the acquisition amount of 5 billion won as a loan, with a clause stipulating that funds should be repaid if the business was not executed as planned.
Afterwards, Company D failed to comply with the clause, but submitted a poor sales contract that did not include the contract amount or delivery deadline, requesting an extension of the implementation period. Mr. C granted two extensions and deleted the clause altogether in 2021, having overestimated the expected revenue.
KOSME lost the opportunity to recover the principal and interest of 5.98 billion won, and when Company D entered court receivership in 2022, it had to treat 2.7 billion won as a loss, excluding certain repayment amounts.
The Board of Audit and Inspection requested the prosecution to investigate Mr. C on suspicion of breach of trust, and demanded a warning against other involved parties at KOSME.