Tennis Court Detour Operation and High-Cost Expenditure... Financial Supervisory Service Detects Dongyang Life Insurance Inspection

After Securing Operating Rights Through Circumvention, Over 3 Billion KRW Spent
Executive Overseas Travel Expenses Paid Without Documentation

As a result of an investigation by financial authorities, it was revealed that Dongyang Life Insurance unreasonably spent business expenses during the acquisition and operation of a tennis court. Despite lacking the qualifications to obtain the operating rights, the company circumvented the rules to secure the rights and unilaterally signed contracts unfavorable to the company, thereby managing business expenses irrationally.

The Financial Supervisory Service (FSS) announced on the 24th that it conducted an on-site inspection of Dongyang Life Insurance's business expense management from the 4th to the 15th of last month and obtained these results.

The investigation found that although Dongyang Life Insurance was not qualified according to the bidding announcement for the operating rights of Tennis Court A, it signed an advertising contract with sports facility operator Company B and effectively exercised the operating rights of the tennis court. Approximately 1.1 billion KRW was paid to Company B under various commission names, including the tennis court bid price of about 2.7 billion KRW, labor costs, and management fees. Subsequently, Dongyang Life Insurance promoted Tennis Court A as part of a healthcare service utilizing tennis.

In particular, the entire bid amount was executed without reasonable review. The bid amount for the tennis court proposed by Company B (2.66 billion KRW) and the facility holding costs were significantly higher compared to the previous operating rights bid price (370 million KRW) and the minimum bid price of 640 million KRW. The expenses were executed at an amount more than 500 million KRW higher than the initial three-year proposal of 2.1 billion KRW by Company B. Nevertheless, post-management of usage performance was insufficient.

Additionally, Dongyang Life Insurance paid related expenses without review despite lacking supporting documents such as documents proving business relevance or expense settlement statements when spending on executive overseas travel expenses and other costs. Business expenses were also irrationally managed, such as increasing business promotion expenses without justification.

The FSS stated that it will take measures according to relevant regulations regarding the violations found in the contract signing and business expense execution related to Dongyang Life Insurance's tennis court. Furthermore, if necessary, it will notify investigative agencies after internal reviews concerning damages caused to the company by executives and employees during this process, in accordance with relevant laws.

In response, Dongyang Life Insurance said, "Although we sincerely explained the matter during the FSS inspection, we deeply regret that such inspection results have been announced, causing concern to our customers, shareholders, and employees." They added, "Until a final decision is made, we will do our best to cooperate sincerely with the ongoing investigation and faithfully clarify our position."

Financial Supervisory Service, Yeouido, Seoul. Photo by Jinhyung Kang aymsdream@

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