Daegu City Requests Reconsideration of Audit Office Disciplinary Notification on Sewage Sludge Project

Board of Audit and Inspection, "Private Investment Should Follow Only the Private Investment Act... Preferential Treatment to Specific Companies"
Citing Supreme Court Precedent, "Promotion of Private Investment Projects under the Public Property Act

Internal equipment view of Hyundai Construction sewage sludge demonstration facility.

[Asia Economy Yeongnam Reporting Headquarters Reporter Park Dong-wook] Daegu City announced on the 17th that it has requested a re-deliberation regarding the Board of Audit and Inspection’s notification demanding disciplinary action and caution against related personnel for allegedly mishandling tasks related to the installation and operation of the sewage sludge treatment facility (drying fuel facility).

Daegu City explained that after switching the treatment of sewage sludge from the existing drying solidification facility to the drying fuel facility and failing to receive national funding, it proceeded with the project as a private investment business. According to the government policy, the city had been installing and operating a solidified soil production facility (drying solidification facility) with 30% national funding, but due to performance and operational issues, it pursued sludge reduction by installing a filter press under the mediation of the Board of Audit and Inspection.

In this regard, the Board of Audit and Inspection judged that private investment projects can only be conducted under the Private Investment Act and that pursuing private investment projects under the Public Property Act is illegal, concluding that by omitting the third-party public offering, preferential treatment was given to a specific company.

In response, Daegu City argued, "Pursuing private investment projects by granting usage and profit rights for donated property under the Public Property Act is lawful, and the administrative agency has discretion in deciding the method of private investment projects."

As the basis for this claim, the city cited a recent Supreme Court precedent (delivered on April 29, 2017Du31064) stating, "When a project is pursued under the Public Property Act, it is sufficient to follow the methods and procedures prescribed by the Public Property Act, so the third-party public offering procedure stipulated in the Private Investment Act is not necessary."

Regarding the Board of Audit and Inspection’s judgment that "the business operator’s demand for and agreement on fees for recovering the total project cost as a condition of donation is a conditional donation act prohibited under the Public Property Act," Daegu City rebutted, "Such an agreement was made to add the city’s priority obligation for sewage sludge treatment when granting free usage and profit rights, and this method is recognized by the Supreme Court precedent."

Furthermore, the city emphasized, "The fee payment agreement in the contract was not compensation for property donation but payment for sewage sludge treatment, and setting a fee cap in advance through the contract before receiving the donation was a reasonable measure," adding, "The project was promoted after going through all procedures including feasibility and eligibility review by Daegu-Gyeongbuk Research Institute, review by the Public Property Deliberation Committee, approval by the city council, and prior consulting audits."

Daegu City stated, "Whether to conduct a private investment project under the Public Property Act or the Private Investment Act is a policy decision that can be made considering the circumstances at the time," and stressed the necessity of proactive administration by saying, "If the project had been pursued according to conventional procedures and methods out of fear of audits despite the existence of an alternative to quickly proceed with the project under the Public Property Act, it would have resulted in continued neglect of the problem."

This content was produced with the assistance of AI translation services.