A Board of Audit and Inspection review found that about 9.3 billion won was embezzled at a corporation established with an environmental improvement fund. The Korea Industrial Complex Corporation (KICOX), which oversees the project, was found to have been lax in oversight, failing to recognize that a director of the corporation embezzled funds by depositing sales proceeds into personal and personally owned company accounts.
The accounting firm appointed as the external auditor knew about the embezzlement but did not inform the CEO, the auditor, or the Financial Services Commission, and processed the embezzled amount in the accounts as if it were legitimate. The Board of Audit and Inspection said it notified the KICOX chair to check the propriety of fund management from time to time and informed the Financial Services Commission chair to prepare measures against the involved accounting firm and accountants.
On the 16th, the Board of Audit and Inspection released the results of an audit on the push to improve regulations for industrial complexes. The board said the audit was conducted to determine why the effects of regulatory improvement have been slow, reflecting criticism that industrial complex development remains prolonged even though government ministries have continued to pursue regulatory easing, such as simplifying development procedures, to strengthen the competitiveness of industrial complexes.
The audit revealed embezzlement totaling in the 10 billion won range. According to the Board of Audit and Inspection, in Nov. 2018 KICOX signed a business agreement with Company A (lead operator) to build a Knowledge Industry Complex funded by the environmental improvement fund and established Corporation B. During project implementation, Mr. C, designated by Company A as a director of Corporation B, embezzled 9.3 billion won in 2022 and 2023 by depositing sales proceeds into personal and personally owned company accounts. To conceal this, the director falsely reported the sales rate and booked the embezzled amount as "short-term loans to shareholders and executives."
KICOX's audit and the asset management company did not recognize these facts. The accounting firm that conducted the external audit, despite knowing about the embezzlement, disguised it as normal by recording it not as "accounts receivable from illegal acts by employees," but as "short-term loans to shareholders and executives."
The Board of Audit and Inspection also revealed that Korea Land & Housing Corporation (LH) made corporations that newly won auctions or public auctions for factories within rental-only industrial complexes bear existing corporations' arrears in rent, overdue interest, and litigation costs without any legal basis. The amount LH collected came to 3.13 billion won from 18 corporations. The board issued a "caution" to the LH CEO to prevent signing lease contracts that impose overdue rent on corporations that acquire buildings through auctions or public auctions from corporations in arrears.
Cases were also detected in which tenant corporations of industrial complexes are suspected of evading acquisition taxes by abusing a system that exempts them from heavy taxation when acquiring real estate in large cities. In a sample check of Industrial Complex D, the Board of Audit and Inspection estimated that 20 corporations leased shared offices in the complex and, without substantive business activity, acquired 61 properties in Seoul and evaded acquisition taxes totaling about 9.9 billion won. The board notified the Ministry of the Interior and Safety and the Seoul Metropolitan Government to prepare improvement and corrective measures.