[2020 National Audit] Secret High-Value Consulting Contracts with Spouses... Lax External Activity Oversight at Government-Funded Research Institutes

Song Jae-ho of the Democratic Party, member of the National Assembly's Political Affairs Committee
Detected for irregularities including failure to report, receiving consulting fees from companies, and contracting with acquaintances
"Thorough investigation needed into fraudulent activities such as contracts involving private interests"

[Asia Economy Reporter Jeon Jinyoung] Employees belonging to the Korea Research Institute of Economy and Humanities (hereinafter referred to as KRIH) and affiliated government-funded research institutes (hereinafter referred to as government-funded research institutes) have been found to have pocketed 3.6 billion KRW over five years through improper external activities and concurrent positions. National research institutes are subject to the Anti-Graft Act. However, fraudulent acts such as deliberately omitting reports while receiving high consulting fees from companies, or signing contracts with acquaintances or spouses, have been uncovered. There are criticisms that management and supervision of improper external activities and concurrent positions are lax.

[Image source=Yonhap News]

According to data submitted on the 19th by Song Jae-ho, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, there were 4,093 cases of improper external activities and concurrent positions in 23 KRIH and government-funded research institutes over the past five years. By institution, the Science and Technology Policy Institute had the highest number of detected cases at 916, followed by the Korea Maritime Institute with 463 cases, the Korea Transport Institute with 439 cases, the Korea Educational Development Institute with 307 cases, and the Korea Legislation Research Institute with 286 cases.

These institutions are subject to the Anti-Graft Act as they receive government budget support. When engaging in external activities such as external lectures or policy consulting, they must report within 2 to 5 days and obtain the necessary reports and approvals. Fees such as lecture fees, manuscript fees, and appearance fees cannot exceed the prescribed limits, and if exceeded, the excess amount must be reported and immediately returned to the provider.

However, the total amount returned after exceeding the fee cap under the Anti-Graft Act was only 5,487,500 KRW, and the total amount received as high-value policy consulting fees exceeding 5 million KRW through companies and affiliated organizations related to their work reached 290 million KRW. In the case of the Korea Labor Institute, it was found during a 2023 audit by the Office for Government Policy Coordination that they had signed policy consulting contracts with 14 companies including Korea GM and received a total of 58 million KRW in high consulting fees between 2017 and 2018.

There were also cases of contracts signed with private stakeholders such as acquaintances or relatives. For example, the Korea Research Institute for Human Settlements was found to have 36 cases of failure to report private interests, such as appointing and employing their own spouse or sibling. The Korea Research Institute for Vocational Education and Training also executed expert activity fees and daily labor wages totaling 135,969,800 KRW for spouses and siblings in research projects without reporting. However, subsequent measures were limited to institution-level education.

In addition, many cases were detected where external activities were processed as business trips to receive travel expenses while holding concurrent positions and profiting from such acts. Representative Song stated, “Government-funded research institutes, which should lead the values of fairness and justice, must not compromise the quality and fairness of research through improper external activities and concurrent positions,” and added, “A thorough investigation must be conducted to determine whether there are fraudulent activities such as contracts with private stakeholders.”

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