[Exclusive] Board of Audit and Inspection Audits Ministry of Economy and Finance and Lottery Commission for 'Violation of National Contract Act'

Ministry of Economy and Finance, Policy Office, Audit Office, and Treasury Bureau Mobilize Full Response
Insiders Express Concern: "Is Last Year's Audit Scandal Repeating?"

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] It has been confirmed that the Board of Audit and Inspection (BAI) has launched an audit on the Ministry of Economy and Finance’s Lottery Commission. The BAI is reviewing the process in which the lottery trustee, Donghaeng Lottery, changed its paying bank, suspecting a possible violation of the “Act on Contracts to Which the State is a Party” (State Contract Act). Inside the Ministry of Economy and Finance, concerns are rising that the audit turmoil might recur following last year’s audit related to national debt at the end of the year.

According to the BAI and the Ministry of Economy and Finance on the 12th, the BAI recently summoned the then Lottery Commission Secretariat Chief for investigation regarding the “2018 4th term lottery trustee selection.” Additionally, after completing a 15-day regular audit of the Ministry from April 19 to May 14, the BAI has commenced an additional audit.

The BAI judged that changing the designated paying financial institution from Woori Bank to NongHyup Bank at the time of signing the contract with the lottery trustee violated the State Contract Act. According to Article 13 of the State Contract Act, when the head of each central government office or the contracting official concludes contracts for construction, manufacturing, or services, they must directly supervise or delegate supervision to affiliated officials as necessary to ensure proper contract execution based on the contract, design documents, or other related documents. In this case, a new contract should have been signed when changing the financial institution responsible for payment, but this process was omitted.

The Ministry of Economy and Finance maintains that there is no problem at all. Since the trustee, Donghaeng Lottery, is a corporation, they viewed that contract changes could be made flexibly. Accordingly, they explained that the contract change itself is not an issue and that the trustee merely designated NongHyup as the transaction bank. The Donghaeng Lottery consortium has been entrusted to operate and manage the lottery business for five years starting from December 2, 2018. Currently, the Ministry is mobilizing the Planning and Coordination Office, Audit Office, Treasury Bureau, and others to respond.

A government official stated, “The opinions of the BAI and the Ministry’s officials differ,” adding, “The BAI views the changes from the original contract as a violation of the State Contract Act.” Typically, the BAI audits the appropriateness of major work processes and budget operations to enhance the performance of key functions and the efficiency of agency operations.

Within the Ministry, amid ongoing criticism over policies related to real estate and inflation, concerns are emerging that external criticism toward the ministry may intensify as it undergoes an audit by the BAI. The last full audit of the Ministry by the BAI was in February to March 2017, and a special audit related to national debt was conducted for two months in December last year.

The Ministry’s Audit Office said, “When audits are conducted, various issues related to personnel, finance, and contracts may arise,” and added, “Since the audit is currently ongoing, we cannot confirm the details.” A BAI official also responded, “As this is an ongoing matter, it is difficult to confirm the details.”

Meanwhile, after investigating the case, the BAI plans to decide whether to submit the matter to the Audit Committee agenda.

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