Controversy Over Financial Supervisory Service's Overreach in Inspection; People's Solidarity for Participatory Democracy Says "Cheongwadae May Intervene in Audits and Investigations Beyond Its Authority"

Cheong Wa Dae Discloses Inspection Operation Regulations Amid Controversy Over Financial Supervisory Service Audit Overreach in June Last Year
Includes Employees Not Appointed by President, Raising Concerns of Abuse of Authority
People's Solidarity for Participatory Democracy Criticizes Potential Overreach in Audit and Investigation Scope

The Blue House's full disclosure of the Presidential Secretariat's Public Office Inspection Team operation regulations, spanning a total of 5 chapters and 21 articles, is expected to intensify controversy over the Financial Supervisory Service's (FSS) overreach in inspections. This is because Article 7 (Scope of Inspection Duties), which defines the subjects eligible for inspection, explicitly states that inspection duties are to be performed concerning "high-ranking public officials, agency heads, and executives appointed by the President." Last year, the inspection by the Office of the Senior Secretary for Civil Affairs lasted four months and reportedly included regular employees, raising concerns that the inspection exceeded its authorized scope.

According to political and financial circles on the 26th, the Blue House's Office of the Senior Secretary for Civil Affairs began inspecting the FSS Director and executives in February of last year. According to a response received by Yoon Chang-hyun, a member of the People Power Party, from an FSS official, an on-site inspection took place for about five days in early February. Subsequently, the inspection was conducted extensively over four months.

The dominant interpretation behind the Office of the Senior Secretary for Civil Affairs' inspection is linked to the overseas interest rate-linked derivative-linked fund (DLF) scandal and the large-scale suspension of redemptions in private equity funds such as Lime Asset Management. It is argued that since numerous victims emerged due to the incomplete sales practices of private financial companies, the inspection aimed to verify whether the FSS, responsible for financial examination and supervision, fulfilled its duties.

In June of last year, the Office of the Senior Secretary for Civil Affairs concluded the inspection by requesting severe disciplinary action against two FSS employees. The reasons reportedly included responsibility related to the DLF scandal as well as the unauthorized use of passwords at Woori Bank. This incident involved some Woori Bank branch employees in 2018 who manipulated customers' passwords without authorization to assign new passwords to dormant customer accounts, thereby boosting their performance records.

However, this raised controversy over whether the Office of the Senior Secretary for Civil Affairs could inspect employees who were not appointed by the President. Yoon Seok-heon, the former FSS Director at the time, also strongly questioned this suspicion in public. When he appeared before the National Assembly's Political Affairs Committee on July 29 last year, he asserted, "The staff members are not subjects of (Blue House) inspection."

Even if unrelated intelligence is transferred, investigation status can be rechecked

In response, the Citizens' Coalition for Economic Justice's Administrative Monitoring Center requested the Blue House in September last year to disclose the "Public Office Inspection Team Operation Regulations" and the "Guidelines on the Collection, Analysis, and Management of Digital Data." The Blue House refused disclosure, citing that releasing the regulations could significantly hinder the performance of inspection duties. The Citizens' Coalition then filed a lawsuit against the Presidential Secretariat Chief to cancel the refusal of information disclosure.

In April at the first trial and last month at the second trial, the Citizens' Coalition won both cases. The Seoul Administrative Court, which presided over the first trial, ruled, "Each piece of information in this case pertains to audit and supervision matters, and there is no substantial reason to believe that disclosure would significantly hinder the fair performance of duties." The second trial similarly ruled that disclosure would enable public oversight and control over whether affiliated public officials comply with regulations.

On this day, the Citizens' Coalition's Administrative Monitoring Center disclosed the related regulations and strongly raised issues regarding Article 11 (Transfer Process). Article 11 consists of four clauses. Clause 2 states that if intelligence about corruption outside the scope of duties is obtained, it must be reported to the Anti-Corruption Secretary, and if the matter is serious, it can be transferred to investigative or audit agencies.

The problem lies in Clauses 3 and 4. Clause 3 stipulates that for confirmed corruption or serious matters reported under Clause 2, the Anti-Corruption Secretary must report to the Senior Secretary for Civil Affairs. Clause 4 allows the Public Office Inspection Team to check the progress of investigations or audits even if the matter was transferred or requested for investigation under Clause 2. This raises concerns that the Blue House can effectively be aware of intelligence and corruption involving individuals not subject to inspection as defined in Article 7.

A representative from the Citizens' Coalition stated, "I don't understand the meaning of rechecking investigation status after transferring a case that is outside the scope of inspection," and added, "There needs to be a question raised about what information the Office of the Senior Secretary for Civil Affairs can verify."

Regarding this, a Blue House official stated, "We cannot confirm details related to the Office of the Senior Secretary for Civil Affairs' inspections."

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