Gov't Spent W10 Billion on Inter-Korean Liaison Office

The Unification Ministry spent a whopping W10 billion from the Inter-Korean Cooperation Fund on setting up a cross-border liaison office in the North Korean border town of Kaesong without consulting the National Assembly (US$1=W1,133).

Lawmakers were left out of the whole process and merely informed after the money had been spent. Instead, the government got the expenses rubber-stamped by a body called the Inter-Korean Exchange and Cooperation Promotion Council.

The Unification Ministry met with the council on July 16 and obtained permission to draw W86 million from the fund for renovations on an existing building in the shuttered Kaesong Industrial Complex. The ministry decided to settle the remaining amount later.

The liaison office had its grand opening on Sept. 14. The renovation work took less than two months, but the ministry set aside less than one percent of the cost in advance and then drew a blank check to finance the remainder of the work.

According to Liberty Korea Party lawmaker Jung Yang-seok, it recently obtained approval from the council to draw W9.78 billion from the fund. Some W7.95 billion was spent on renovating the building and living quarters, W1.6 billion to repair plumbing and W168 million on project management. North Korea did not spend a dime.

The four-story building used to serve as the council's office when the industrial park was in operation. Opposition party lawmakers are asking why it cost W10 billion simply to renovate if it only cost W8 billion to build from scratch in 2005.

A Unification Ministry staffer said, "Unlike ordinary construction projects, South Korean workers had to stay in North Korea while renovation was underway, resulting in high labor costs, and a lack of proper infrastructure in the North also had an effect."

Critics said the government bypassed the rules by failing to provide an accurate cost estimate and simply reimbursing itself from the fund once the work was complete.

This is not the first time that the government has used such tactics to tap into the fund. According to Jung, the ministry also belatedly sought permission to draw W2.9 billion from the fund to pay for a North Korean delegation's visit to the Winter Olympics in Pyeongchang, five days after the money had been spent.

Some W1.6 billion that was spent to send South Korean performers and a taekwondo team to Pyongyang in April was only approved in May, and W3.2 billion spent on renovating a reunion center in North Korea's Mt. Kumgang resort for families separated by the Korean War and on hosting the gathering was authorized 18 days after the money had been spent.

This was possible because the council consists mostly of officials friendly to the government. All 18 members were recommended by Unification Minister Cho Myoung-gyon and other ministers, and four of the council's five civilian members are considered friendly to the Moon Jae-in administration.

One former member of the council said, "The government usually selects members who support its policies rather than representing the opinions of the public." More than 90 percent of the council's work is done through paperwork rather than in physical meetings where concerns could be raised.

Another problem is that the W1 trillion Inter-Korean Cooperation Fund is not subject to National Assembly control. The ministry merely informs lawmakers of expenditures afterwards and is not obliged to list details.

"There is no precedent of any government using W10 billion in funding and only gaining approval after it has been spent," Jung said. "We need to take urgent steps to prevent the government from using the fund as its personal ATM."