Gwangjin-gu, When Will the Controversy Over Returning Seoul City's Sewing Budget (500 Million Won) End?

On the 10th, at the Gwangjin-gu Council's extraordinary session, three Democratic Party council members intensely questioned Kim Seon-gap, Gwangjin-gu Mayor from the same party, followed by attacks through comments by Seoul Metropolitan Council members Oh Hyun-jung and Jeon Byeong-ju; on the 18th, Jeon Byeong-ju issued another press release raising issues... Gwangjin-gu also released explanatory materials, continuing the dispute, with attention on the resolution outcome.

[Asia Economy Reporter Jong-il Park] Controversy continues over Seoul City’s return of 500 million KRW in sewing industry project funds (‘Smart Process Innovation Project’) allocated to Gwangjin-gu.

On the 10th, during the Gwangjin-gu Council’s extraordinary session, three council members from the Democratic Party intensely questioned Gwangjin-gu Mayor Kim Seon-gap, who is also from the same party. Subsequently, Seoul Metropolitan Council members Oh Hyun-jung and Jeon Byeong-ju issued statements criticizing Mayor Kim.

On the 18th, Jeon Byeong-ju, a Seoul Metropolitan Council member (Democratic Party, Gwangjin 1), strongly criticized Gwangjin-gu’s decision to leave unused the 500 million KRW budget for the ‘Smart Process Innovation Project’ received from Seoul City.

Claims by Council Member Jeon Byeong-ju

In 2020, Gwangjin-gu was selected for Seoul City’s ‘Smart Process Innovation Project’ and received a budget of 500 million KRW.

Although approved for use at the Junggok-dong site, from October 2020 to April 2021, Gwangjin-gu attempted to change the location to Guui-dong, a newly constructed site donated to the district, differing from the original project plan. The reasons cited were fixed costs (deposit, rent, management fees, etc.) and interior costs due to the aging building.

However, Seoul City officials had designated the project as Grade 1 (500 million KRW) rather than Grade 2 (300 million KRW) based on on-site inspections and document reviews of Junggok-dong. This indicated no issues with the overall budget allocation evaluation for Junggok-dong.

The ‘Smart Process Innovation Project’ aims to install and operate a shared foundation room and revitalize the sewing industry through fashion and sewing education. It is not a budget-saving project for Gwangjin-gu. In other words, it is a project to revive the sewing industry through budget support.

For these reasons, while Gwangjin-gu delayed the project, Seoul City sent two official letters urging progress at the Junggok-dong site, and ultimately, in December 2021, notified the full recovery of the 500 million KRW.

Regarding this, Mayor Kim Seon-gap of Gwangjin-gu stated, “We did not proceed with the ‘Smart Process Innovation Project (budget support 500 million KRW)’ because we intended to apply for the ‘Smart Solution Anchor Project (budget support 2 billion KRW), which is known as a similar project,” adding, “Not proceeding with the ‘Smart Process Innovation Project’ avoids a 30-point deduction for overlapping similar facilities in the ‘Smart Solution Anchor Project.’”

However, Seoul City confirmed that at the time of requesting the site change to Guui-dong, the ‘Smart Solution Anchor Project’ was not a public contest but a Seoul City internal project. In other words, budget support was provided to districts selected internally by Seoul City. The related projects should have been promptly pursued through Seoul City council members Jeon Byeong-ju and Oh Hyun-jung, who belong to Gwangjin-gu. The project later changed to a public contest in September 2021.

Also, as of April last year, there was no deduction clause for avoiding overlapping similar facilities. Since it was a Seoul City internal project, there were no specific criteria. The controversial deduction clause was newly established in the ‘Smart Solution Anchor Project Creation and Operation Improvement Plan (draft)’ in September 2021. The maximum deduction for this clause is 5 points, and the claim of a 30-point deduction was proven false.

Currently, it has been revealed that some places received support for both the ‘Smart Process Innovation Project’ and the ‘Smart Anchor Project.’ Jungnang-gu was selected for the ‘Smart Process Innovation Project’ in 2021 and received budget support, and was also selected for the ‘Smart Anchor Project’ in 2018, with construction scheduled to start in May 2022. This means Gwangjin-gu could have proceeded with the ‘Smart Anchor Project’ while investing 500 million KRW in Junggok-dong for the ‘Smart Process Innovation Project.’

In summary, ① Gwangjin-gu did not proceed with the project as per the ‘Smart Process Innovation Project’ application submitted to Seoul City. This caused economic losses to sewing small business owners located in Junggok-dong and led to a loss of trust in Gwangjin-gu. ② Not even applying for the ‘Smart Anchor Project,’ which could receive national and city subsidies, is not only neglect of duty but also tantamount to ignoring the opinions of Gwangjin-gu’s sewing small business owners. ③ Returning the 500 million KRW for the ‘Smart Process Innovation Project’ without receiving a firm selection confirmation from Seoul City for the ‘Smart Solution Anchor Project’ will be recorded as the worst administrative handling in the history of autonomous districts.

Finally, Council Member Jeon said, “The damage caused by Gwangjin-gu’s ‘great exploration failure’ administrative handling was directly passed on to the sewing small business owners,” and “Even now, related measures for sewing small business owners must be urgently devised, and efforts should be made to apply for projects that can receive not only city funds but also national subsidies to revitalize the sewing industry.”

Gwangjin-gu’s Rebuttal and Explanation

? Summary of the report

Gwangjin-gu delayed the Smart Process Innovation Project to create a sewing hub facility and ultimately returned the budget.

Despite being able to apply for the 2021 Smart Anchor Project, they did not even submit an application.

? Summary of explanation

① Two members of the Gwangjin-gu sewing organization were legally convicted for embezzlement of funds, and two others are under investigation, making normal consultations with the district office difficult and causing challenges in additional budget support. In May 2021, President Park and Secretary Kim of the ㅇㅇ Association were definitively sentenced by the Eastern District Court for embezzling 8.5 million KRW out of the total 44.5 million KRW budget for the ‘Seoul City Apparel Manufacturing Collaboration Project’ in 2019.

In October 2021, two other executives of the same association, Kim ㅇㅇ and Kim ㅇㅇ, were also reported for embezzlement of subsidies and are under investigation by the Gwangjin Police Station’s investigation department.

※ The ㅇㅇ Association in Gwangjin-gu was established in April 2020 after splitting from the Gwangjin-gu Sewing Cooperative, which was founded in 2017 due to organizational conflicts.

② Reason for returning the 500 million KRW budget for the Smart Process Innovation Project in August 2020

- There was a serious practical concern about whether to provide additional subsidies to an organization with a confirmed embezzlement case.

※ Relevant regulation: Article 32-8 of the Local Finance Act prohibits subsidy provision to embezzling organizations for five years.

- Gwangjin-gu considered changing the installation site from the originally planned Junggok-dong 626-16 to the newly constructed Gwangjin Economic Hub Center (Guui 1-dong) to contribute to revitalizing the sewing industry by installing an automatic cutting system in a better environment.

- However, during consultations with Seoul City, it was difficult to change to a non-clustered area, and during this process, they were offered the Smart Solution Anchor Project (2 billion KRW). To secure this public contest project, they returned the Smart Process Innovation Project budget (500 million KRW).

※ Compared to the Smart Process Innovation Project, the Smart Solution Anchor Project involves similar facilities and equipment but offers 3 to 4 times the support scale and allows operating cost subsidies for three years.

※ Installing both projects (facilities) simultaneously is impossible due to a 30-point deduction for overlapping similar facilities in the Smart Solution Anchor Project’s contest criteria.

③ The public contest for Seoul City’s Smart Solution Anchor Project (budget 2 billion KRW) was not executed.

- The above-mentioned contest project proposed by Seoul City was not included in the 2022 budget and thus was not implemented.

※ Related official document: Notification of the Smart Solution Anchor Project Creation and Operation Improvement Plan (draft) (Seoul City Manufacturing Industry Innovation Division-1603, Sept 7, 2021)

< Follow-up action: Submission of project application and agreement draft planned by Nov 30, 2021 >

? No follow-up official documents have been issued to date.

- According to the claim, Seoul City held a public contest for the ‘Smart Anchor’ project (similar to the ‘Smart Solution Anchor’) in 2021, but this contest project is a national subsidy project (Ministry of SMEs and Startups) requiring a large site of over 850㎡ provided as district-owned land. Since there are no idle city or district-owned lands in Junggok-dong and nearby areas, our district was not in a position to apply. The claim that we did not apply is a misunderstanding of our district’s reality and a mistaken accusation.

※ In other local governments, even those selected for the Smart Anchor Project, which costs over 16 billion KRW, about half have abandoned the project due to local residents’ opposition and excessive operating costs.

④ Considering the difficulties faced by many sewing companies unaware of the embezzlement by sewing organization officials, Gwangjin-gu will strengthen various support policies such as management consulting, work environment improvement, and special financial support to revitalize the sewing industry and actively strive to secure the Smart Solution Anchor Project.

- In 2021, supported a record-high 35 companies for work environment improvement projects.

- Implemented Gwangjin-type special financial support (interest and guarantee fee support for one year).

With both sides’ claims sharply contrasting, and the possibility of escalating into an emotional conflict, attention is focused on how the issue will be resolved.

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