Financial probe: Supporters with Chinese and South Korean flags at the Apec summit in Busan. A special audit is investigating allegations of funds misappropriation and excessive spending, including bidding procedures, project scope and rebate arrangements. — Reuters
SEOUL: South Korea’s top business lobby, the Korea Chamber of Commerce and Industry (KCCI), is set to undergo a special government audit following allegations of fund misappropriation and excessive spending linked to last year’s Asia-Pacific Economic Cooperation (Apec) CEO Summit.
The Trade, Industry and Resources Ministry will launch a special inspection today into financial irregularities surrounding the lobby group, which organised the business event held last October in Gyeongju, North Gyeongsang Province.
The audit follows a report that a senior-level official in the summit’s organising committee attempted to inflate a hotel price when booking accommodation for participants of the summit.
The person requested the hotel to issue an invoice charging 48.5 million won, when the actual price was 45 million won. He then tried to have the hotel transfer the difference of 3.5 million won to his personal bank account.
While the actual transfer was not completed, the KCCI said the official has been suspended from duty and that an internal audit by the chamber is underway.
“We will fully cooperate with the government’s audit,” said a KCCI official.
Additional allegations have surfaced over the KCCI’s broader spending and procurement practices as well, prompting the government to expand its inspection.
Industry Ministry officials are expected to examine the entire contracting process, including bidding procedures, project scope and potential rebate arrangement, sources say.
Among the allegations is one regarding a sharp increase in costs tied to the event.
The KCCI hired an event agency for 28.5 billion won to organise the overall event.
Following the summit, the agency billed more than 120 billion won, citing additional projects. The two sides have largely settled the final cost, reducing it to around 100 billion won, according to officials.
The KCCI defended the increase, saying the scope of the event expanded during the planning process.
“As preparations progressed, additional programmes were added,” the KCCI official said. “As this was an international event, the scale has expanded beyond initial expectation, as the number of foreign guests grew, which lead to higher costs.”
The KCCI has also come under fire for charting two cruise ships docked in Yeongilman Port in Pohang, about 40 km north of Gyeongju.
The ships were intended to house up to 1,000 guests, but fewer than 100 guests reportedly stayed aboard, sparking concerns over wasteful spending.
The KCCI explained that the decision to charter cruise ships came from early concerns over a severe shortage of hotel rooms in Gyeongju.
As preparations progressed the situation improved. The official added that the government later released hotel room blocks it had initially secured, and hotel availability in Gyeongju improved significantly, reducing demand for cruise lodging.
“Given that this was an international event, we believed it was better to prepare in advance and with more capacity to avoid any shortages,” the official said. — The Korea Herald/ANN
