Embezzlement of Waste Disposal Fund by Gangdong-gu Office Employee: Around 1 Million Won Burden per Employee?

Gangdong-gu Announces Investigation Results and Recurrence Prevention Measures for Embezzlement of Waste Disposal Facility Installation Fund... Gangdong-gu Office Employee A Embezzled Waste Disposal Fund, Adjusted Expenditures by Over 1.4 Billion KRW for Employee Welfare Costs... A Forged or Falsified 9 Official Documents Related to the Fund... 13 Related Personnel Found Negligent in Supervision Disciplined According to Responsibility... Key Recurrence Prevention Measure Includes ‘Exclusive Fund Income System’ Introduced in March... External Fund Resources Not Routed Through Separate Public Accounts

[Asia Economy Reporter Park Jong-il] Gangdong-gu (District Mayor Lee Jeong-hoon) announced the results of its internal investigation and measures to prevent recurrence regarding the embezzlement case involving the Waste Disposal Facility Installation Fund that occurred last January.

After recognizing the damage to the fund through a corruption report on the Waste Disposal Facility Installation Fund received on January 21, the district filed a complaint with the Gangdong Police Station on January 23 against Mr. A, who was in charge of the fund, on charges of “Violation of the Act on the Aggravated Punishment, etc. of Specific Crimes (Embezzlement),” and suspended him from his position.

Additionally, on January 25, a “Special Investigation Team for Public Officials’ Corruption” was formed to investigate those involved in the misconduct. At the same time, the causes and circumstances of the embezzlement incident were analyzed, and audits were conducted on the internal control system in the work management area as well as the overall budget and accounting management system for the fund and public accounts.

Details of the Embezzlement Investigation

According to Gangdong-gu’s investigation, Mr. A was found to have forged or falsely prepared nine official documents related to the fund. He falsified documents in the fund settlement report to make it appear as if already paid charges had not been received, deliberately omitted team leader approvals, and forged approvals under a manager’s name on his own PC to deceive superiors. The investigation confirmed, consistent with the police findings, that the crime was committed solely by Mr. A without any collaborators or accomplices.

Accordingly, on January 27, the district filed an additional complaint with the Gangdong Police Station against Mr. A for forgery and use of official documents, forgery and use of electronic records, and requested the Seoul Metropolitan Government to impose severe disciplinary action on Mr. A, who committed a serious crime with intent.

Furthermore, 13 individuals related to the misconduct, whose negligence in supervision and management of Mr. A was revealed, will face disciplinary measures according to the degree of responsibility.

To ensure fairness, objectivity, and strictness in these measures, the district thoroughly analyzed audit cases and disciplinary outcomes of embezzlement incidents from other institutions such as the Board of Audit and Inspection, consulted with related organizations, and established disciplinary standards based on the degree of responsibility. The district announced that a disciplinary committee will impose firm and strong sanctions according to these standards.

Measures to Prevent Recurrence

According to relevant regulations, income from the fund must be collected and immediately deposited into the district treasury. However, the Waste Disposal Facility Installation Fund could not receive direct account transfers from external institutions to the district treasury (integrated fund account), so income was deposited into a separate public account and then processed as income into the district treasury.

Mr. A exploited this situation by falsely naming the deposit account as “Gangdong-gu Office Waste Disposal Facility Installation Fund” on payment notices and received the fund payments. He also abused the fact that this public account allowed external fund deposits and withdrawals by transferring public funds to his personal account via internet banking, thereby embezzling the money.

In response, Gangdong-gu established a total of 20 detailed measures?11 in the fund sector and 9 in the public account sector?after consultations and advice from Seoul City, Woori Bank, experts, and practitioners to enhance transparency and control over the fund’s cash flow and prevent recurrence of public fund embezzlement.

A key measure in the fund sector is the “Dedicated Fund Income System” introduced in March. This system allows external fund sources to be directly deposited into the district treasury without passing through a separate public account. For each fund, a “dedicated income account” linked to the district treasury was opened and built to enable continuous monitoring.

The system targets six funds, including the Waste Disposal Facility Installation Fund, which currently use departmental public accounts for income collection.

Moreover, a dedicated organization will be established to strengthen transparency in fund management. This organization will conduct quarterly investigations and reports on fund collection and expenditure, provide ongoing practical training, and reinforce internal controls. In cooperation with the council, external controls will also be strengthened through fund settlement audits, administrative inspections, and enhancement of the expertise of the Fund Deliberation Committee.

In the public fund management sector, to enhance transparency and accountability in managing public accounts, a departmental “Account Inquiry System” was established, and authority for use, management, and supervision was dualized.

Additionally, the district has proposed new functions such as automatic issuance of payment notices linked to the district treasury and revision of fund income manuals, as well as system processing of expenditures other than public funds, to the next-generation local finance management system currently being developed by the Ministry of the Interior and Safety.

Plan to Compensate Fund Losses

To recover the fund losses in advance, besides the police’s confiscation and collection order of 790 million KRW, the district is proceeding with civil preservation measures such as provisional seizure of deposits, securities accounts, real estate, and lease rights, and is also undergoing procedures related to the Board of Audit and Inspection’s compensation judgment.

The district stated that it plans to compensate for the fund losses by 2024 through annual budget savings to ensure no disruption in the construction of the Resource Circulation Center.

In the supplementary budget for March this year, about 1.4 billion KRW will be adjusted from employee welfare expenses and other expenditures to be allocated to the fund, and the district intends to explore additional recovery measures using all possible civil and criminal methods.

Lee Jeong-hoon, Mayor of Gangdong-gu, said, “As the district mayor, I deeply feel responsible for this regrettable incident that should never have happened, and I sincerely apologize to the residents.” He added, “Once again, I offer my heartfelt apologies to the residents.”

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