The Seoul Metropolitan Government said on the 22nd that accounting problems were found at 36 of the 97 village bus companies that received financial support this year, including cases of lending company funds to representatives and other related parties. It issued the statement in response to the Seoul Village Bus Transportation Business Association, made up of 140 companies, saying earlier in the day that it would withdraw from the city's public transit transfer system due to losses.
In a press reference released the same day, the city said it "expresses strong concern about the 'withdrawal from the transfer system' push raised by the village bus association," adding that it "has consistently expressed strong concern and opposition since May, saying it is a wrong choice that would inconvenience citizens and threaten the management of village bus operators."
Earlier in the day, Kim Yong-seung, chair of the Seoul Village Bus Transportation Business Association, held a press conference at the association's conference room in Daerim-dong, Yeongdeungpo District, and said, "All 1,600-plus vehicles of the 140 operators under the association will withdraw from the Seoul Metropolitan Government's public transit transfer system as of Jan. 1 next year." The point was that without expanded financial support from the city, the more they run, the deeper the losses, making it hard to hold on.
However, the city said, "The association claims the industry is suffering management difficulties due to insufficient city support, but an analysis of accounting data from 97 supported operators found accounting problems at 36 companies."
According to the city, Operator A said it was in arrears on 259 million won in national and local government tax and 81 million won in the four major insurance premiums, but last year's financial statements showed a total of 3.748 billion won in lending. The lending consisted of 3.3 billion won to the representative and 375 million won to the representative's relatives. Operator B said it faced a cash crunch, citing loans such as private financing to pay wages, but it lent 516 million won to its CEO last year.
The city also said it should push not for a simple expansion of financial support, but for a rational support system tied to improvements in transportation services for the public. Over the past five years, Seoul's financial support for village buses more than doubled from 19.2 billion won in 2019 to 41.2 billion won this year. Still, low operating rates and compliance with headways continue to inconvenience citizens. In some cases, operators even registered vehicles that did not run to apply for subsidies, or increased runs only on weekends to formally meet the legal frequency, many examples of which were identified.
In response, the city prepared effective improvements including introducing a performance-based support system, ensuring accounting transparency, and normalizing route operations. In early Aug. this year, it submitted the improvement plan to the village bus operation review committee for formal discussion with participation from the village bus industry and experts, and it is also consulting with the association over six rounds. The city said it expresses deep regret over the unilateral push to withdraw while this process is underway.
Lee Ja-young, head of the Seoul Metropolitan Government's Bus Policy Division, said, "Withdrawal from the transfer system is nothing more than pressure that holds citizens' transportation convenience hostage and cannot be a way to solve the problem," adding, "Seoul will continue consultations with the industry to minimize citizen inconvenience and will draw up effective measures that citizens can feel."