MBC, Kangwon Land Also Likely to Undergo Audit

Institutions that have been partially funded by government-endowed organizations, like MBC and Kangwon Land, are soon to be included on the list of candidates for audit by the Board of Audit and Inspection (BAI).

On September 25, the BAI announced that it is working to amend the BAI Act in order to expand the agency’s jurisdiction to entities invested in by government-funded entities, entities funded by government-invested entities (entities for which the government has provided less than 50 percent of their paid-in capital), and entities invested in by government endowments. The new amendment identifies these three categories, thus far considered “audit dead zones,” as candidates for “discretionary” audits.

If the amendment is passed by the regular session of the National Assembly this year, such organizations as the Woori Financial Group, Chohung Bank, Seoul Guarantee Insurance, Daehan Investment & Securities, and the Resolution & Finance Corporation—all funded by the Korea Deposit Insurance Corporation—will become subject to audits by the BAI.

A BAI official said that the expanded list would include over 40 entities. “In particular, the Foundation for Broadcast Culture (FBC), which is a government-funded organization, owns stock in MBC. The history of how the FBC came to acquire such stock is complicated, which causes some difficulties of legal interpretation, but once this amendment is approved, we expect to be able to audit MBC as well,” said the official.

The same official added, “Entities that are subject to discretionary audits will not be audited regularly every one to two years, but will only be audited when absolutely necessary, such as when account management problems occur.”

Yong-Gwan Jung yongari@donga.com