A public servant was found to have opened a bank account in the name of the city hall by unlawfully stamping the mayor's seal and embezzled donations for disaster recovery to invest in virtual assets.
On the 11th, the Board of Audit and Inspection released a major audit report containing these details titled "Examination of fraudulent public finance expenditure." An A official, a project manager in a Grade 6 position in Cheongju, embezzled a total of 497.16 million won over approximately 6 years from November 2018 to May of last year, through 45 instances involving donations, public organization funds, expenditure projects, and local government subsidies.
The A official was investigated for opening a bank account in the name of Cheongju City Hall by using forgery of public documents and unlawfully stamping the mayor's seal, and for embezzling the disaster recovery donation through this account. Additionally, A falsely inflated the project costs in the local government finance system (e-hojo) and secretly handled the electronic approval of superiors, thereby embezzling the project funds he was responsible for. He also misappropriated funds from public organizations and local government subsidies by using the bank account and transaction seals he had kept under the names of Cheongju City Hall and the subsidy contractor.
The Board of Audit and Inspection noted that A used the embezzled funds for virtual asset investments and personal debt repayment. The board demanded A's dismissal from Cheongju City and requested an investigation from the prosecution in July of last year regarding the criminal charges of embezzlement. A was sentenced to 5 years in prison in the first trial last December, and a second trial is ongoing.
The Board of Audit and Inspection pointed to the lax management of the mayor's seal by the Cheongju mayor's office, neglect in accounting and security management by superiors, and poor internal controls as reasons that allowed the large-scale embezzlement to occur over an extended period of time. The manager in charge of the mayor's seal reportedly left the seal unattended without safety measures, and despite A not following proper procedures, allowed A to stamp the withdrawal slips, enabling the embezzlement of over 100 million won.
Additionally, four of A's superiors neglected their responsibilities by approving A's false expenditure requests without verifying legitimate creditors or sharing their PC passwords with departmental staff. The Board of Audit and Inspection explained that A was able to embezzle more than 240 million won due to the negligence of these superiors.
Furthermore, it was revealed that Cheongju City failed to investigate the reasons why A paid project funds into his own account and merely pointed out the missing supporting documents, thus concluding the matter. The Board of Audit and Inspection criticized Cheongju City for inadequately conducting internal inspections, which allowed A to continue his embezzlement without early detection.
The Board of Audit and Inspection demanded disciplinary action against the manager of the seal in Cheongju City and urged caution for A's four superiors. It also issued a warning to the agency to thoroughly conduct related tasks to prevent instances of failure to detect and prevent embezzlement due to poor internal controls.