[Exclusive] 4.6 Billion Won Embezzlement at NHIS for 1 Year... Employees Collected Money While Auditor Gets Reappointed?

Among related executives, the standing auditor was reappointed to serve until next year, having received a 'C grade' performance rating last year.

The embezzling employee remains at large, with only 700 million KRW recovered; controversy also surrounds fundraising attempts targeting employees.

Concerns are being raised over the reappointment of the Standing Auditor of the National Health Insurance Service (NHIS), who was in office during last year's embezzlement incident, as it is considered inappropriate for him to continue his duties.

Exterior view of the National Health Insurance Service Headquarters in Wonju, Gangwon Province [Photo by National Health Insurance Service]

According to the NHIS on the 19th, Kim Dong-wan, the Standing Auditor at the time of the incident last year, was appointed for a two-year term in June 2021. Although his term expired last June, his reappointment was confirmed, extending his term until June next year. Among the executives involved at the time of the embezzlement incident?including the Chairman, Planning Standing Director, and Auditor?Kim is the only one still in office. Chairman Kang Do-tae resigned in March, and the Planning Director position was vacant at the time of the incident; Hyun Hyun-ryong was appointed to that position in December last year.

However, despite the embezzlement incident coming to light, Kim’s reappointment was decided, allowing him to continue his auditing duties until June next year. The term for the NHIS Standing Auditor is two years, with the possibility of renewal on a yearly basis. The Standing Auditor oversees the audit office’s duties, including auditing NHIS’s operations, accounting, and asset status. When Kim was appointed in June 2021, NHIS stated that he was "recognized for his strong ethical awareness and monitoring capabilities regarding organizational management and operations."

According to the Act on the Operation of Public Institutions, the reappointment of auditors in public enterprises and quasi-governmental agencies is determined based on the evaluation of their job performance and other relevant factors. It appears that Kim’s second-highest rating of “Good (B)” in the 2021 Ministry of Economy and Finance’s evaluation of Standing Auditors’ job performance was taken into account.

However, in last year’s job performance evaluation, which reflected the embezzlement incident, Kim received the third-tier rating of “Average (C).” Only three out of 32 quasi-governmental agencies evaluated received a lower “Poor (D)” rating. This evaluation is believed to be due to the “appropriateness of internal audit operations and follow-up management” category under job performance, where Kim scored 13.37 out of 25 points?roughly half the possible score. It was confirmed that the NHIS’s internal audit system did not function properly, as during the embezzlement incident, over five months, seven times, 17 medical institutions’ seized medical fee payment suspensions amounting to approximately 4.6 billion KRW were embezzled.

Jung Ki-seok, President of the National Health Insurance Service, is speaking at the Health and Welfare Committee's audit held at the National Assembly on the 18th.
[Image source=Yonhap News]

Although a year has passed since the embezzlement occurred, the case is still ongoing. Of the 4.6 billion KRW embezzled, the NHIS has only recovered 720 million KRW. The NHIS states that it is making efforts to recover the remaining 3.9 billion KRW. However, the whereabouts of the employee who committed the embezzlement, Mr. Choi, remain unknown, and it is understood that there are no assets left in the country, making recovery difficult. Recently, however, signs of Mr. Choi’s survival were detected through the Korean Desk (a police unit dedicated to foreign Korean cases) dispatched in the Philippines, and he is currently being tracked.

The NHIS’s response is still criticized as not meeting public expectations. When the embezzled amount was not properly recovered, the NHIS faced controversy earlier this year for soliciting donations from its employees. Under the pretext of “fundraising to compensate for embezzlement losses,” a total of 344.99 million KRW was collected from 875 employees, including all 600 employees of grades 1 and 2. Some have raised suspicions that there was a “guideline” specifying how much each rank should contribute, leading to complaints that employees were being squeezed. However, the NHIS stated at the time that there was no guideline and that participation was voluntary, explaining that the funds would be used to support low-income and vulnerable groups with overdue health insurance premiums.

Only three people?the then Director of Financial Management and two former and current heads of the Financial Management Department?were disciplined for their management responsibility in the embezzlement case. All three received a three-month suspension. However, it is reported that the NHIS paid them approximately 90% of their original salary during the suspension period, citing regulations. Kim Mi-ae, a member of the People Power Party, criticized this during the NHIS audit, saying, “If someone is suspended, they should not be paid because they are not working, but they are receiving 90% of their salary. Which citizen would tolerate this?”

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