The Ministry of SMEs and Startups Appears to Be Watching the Prosecutors... Are Small Business Owners Left Behind?

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

[Asia Economy Reporters Kim Jong-hwa and Moon Hye-won] The Ministry of SMEs and Startups has yet to announce the results of its special audit on the Federation of Small Businesses (Sogongyeon), drawing attention to the reasons behind the delay.

Due to the Ministry's silence, the internal turmoil within Sogongyeon following Chairman Bae Dong-wook's dance workshop has not been resolved by the special audit, and the sighs of small business owners, who had hoped that support activities would resume, have only grown louder.

Discontent toward the Ministry has also erupted within Sogongyeon. A Sogongyeon official said, "At the very least, we expected the Ministry to reveal Chairman Bae's abuse of authority so that he could no longer hold on," adding, "Since Sogongyeon itself has become a shell, it would be appropriate to first impose administrative measures and then take additional actions based on the prosecution's judicial decisions."

The Ministry recently completed the special audit of Sogongyeon and is preparing lawful administrative measures based on the results. The Ministry began the special audit on the 16th of last month and conducted an intensive on-site investigation from the 21st to the 23rd of the same month.

They received budget-related documents from Sogongyeon covering the past year and comprehensively examined whether there were any inappropriate aspects in the execution of subsidy budgets. If any improper budget execution or operational irregularities are found, the Ministry can take administrative actions such as recovering subsidies.

However, a month has passed since the Ministry completed the special audit, yet the results have not been announced, leading to speculation such as "the Ministry is avoiding responsibility" or "to avoid influencing the prosecution's judicial decisions."

Typically, results from intensive on-site investigations are not publicly disclosed through the media. However, since Sogongyeon's dance workshop occurred amid the COVID-19 pandemic, causing public outrage and significant media attention, the Ministry is known to have completed legal reviews and internal discussions on when and how to announce the audit results.

Nonetheless, the Ministry remains silent on the audit results, citing "the prosecution's indictment of the Sogongyeon labor union" as the reason. A Ministry official stated, "Administrative measures such as a re-election of the chairman may be taken based on the special audit results," but added, "It is currently advisable to wait for the prosecution's investigation results." In other words, the Ministry's administrative actions could influence the prosecution's judicial decisions.

Regarding this, a legal expert commented, "It seems the Ministry is overstepping. As an independent administrative agency, what does the prosecution's judicial decision have to do with the Ministry's administrative measures?" He added, "It's unclear whether this is arrogance or trying to appease the prosecution. They should just do their job."

The Sogongyeon Secretariat labor union filed a complaint against Chairman Bae on the 21st of last month, accusing him of embezzlement, breach of trust, and violation of the Subsidy Management Act. On the 30th of the same month, they additionally reported him to the prosecution for forgery of official documents and obstruction of business, submitting evidence that Chairman Bae forged business registration certificates when joining the federation. The union also submitted the same evidence to the Ministry, requesting an additional audit.

Separately from administrative measures, the Ministry plans to register Sogongyeon as a "Public Office-Related Organization" in the second half of this year. Such organizations are subject to the Public Ethics System, requiring executives to report assets and follow guidelines similar to public officials. The heads and staff of these organizations are subject to the Act on the Prohibition of Improper Solicitation and Graft.

A small business owner said, "Honestly, I don't care whether the chairman resigns or the union files complaints," adding, "What small business owners want is for support procedures to proceed normally to overcome these difficult times."

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