Ministry of SMEs and Startups conducts on-site investigation of Sogongyeon... "If misconduct is severe, police report will be filed"

Bae Dong-wook, President of the Korea Federation of Micro Enterprise, is leaving the press room after holding a press conference to clarify the so-called 'Dance Workshop' on the morning of the 14th at the Korea Federation of Small and Medium Business in Yeouido, Seoul. Photo by Yonhap News

[Asia Economy Reporter Moon Hyewon] The Ministry of SMEs and Startups has begun an on-site investigation into the Federation of Small and Medium Business Owners (Sogongyeon), which has sparked controversy over events such as the 'Dance Party Workshop,' drawing attention to the future position of Chairman Bae Dong-wook based on the investigation results.

According to the Ministry of SMEs and Startups on the 23rd, the Small Business Policy Division notified Sogongyeon of a guidance inspection earlier this month and requested the submission of materials related to the workshop. Following an on-site investigation at Sogongyeon in Dongjak-gu, Seoul, on the 21st and 22nd, the submitted materials are currently under review. The main focus is to verify whether there were any issues with the use of government subsidies during the workshop.

The Ministry has not yet specified details such as the investigation period or whether the findings will be publicly announced, stating only that these matters are "under internal discussion." Since there is no similar precedent, the Ministry intends to conduct the investigation while fully complying with all legal grounds. However, if Chairman Bae’s misconduct is found to be severe, the Ministry is also open to referring the case to judicial authorities, including filing a police complaint.

First, if there is evidence that government support funds were improperly used during the workshop, the Ministry plans to recover those funds. This action is based on the provision in the Subsidy Management Act that "government subsidies must be recovered if their use violates the intended purpose."

According to Article 27 of the Act on the Protection and Support of Small Businesses, the Minister of SMEs and Startups can issue corrective orders if it is recognized that Sogongyeon’s operations or accounting violate laws or its articles of association. Sogongyeon is a statutory economic organization receiving an annual budget of approximately 3 billion KRW from the government. If Sogongyeon fails to comply with such corrective orders, the Minister may hold a hearing for executives and order their dismissal.

Within Sogongyeon, demands for Chairman Bae’s resignation are growing stronger. Chairman Bae has become embroiled in controversy for holding dance and drinking workshops while small business owners were struggling due to COVID-19. He is also suspected of misusing subsidies for family-inclusive workshops and tourism, as well as favoritism by directing work to a flower shop run by his daughter.

On the 21st, the Sogongyeon labor union filed a complaint with the Seoul Central District Prosecutors' Office against Chairman Bae on charges including embezzlement and breach of trust in the course of duty, violations of the Subsidy Management Act, the Labor Standards Act, and the Labor Union Act. Chairman Bae stated at a press conference on the 14th that he has no intention of stepping down.

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