Bold civil servant embezzles 500 million won for crypto investment... unauthorized use of mayor's seal

Board of Audit and Inspection requests dismissal of the civil servant

Sentenced to 5 years in first trial... second trial in progress

A civil servant from Cheongju City, North Chungcheong Province, was found to have embezzled over 490 million won in public funds over six years to invest in cryptocurrency. This civil servant unauthorized used the mayor's seal to open a bank account in the city hall's name.

According to the Board of Audit and Inspection's 'Public Finance Improper Expenditure Inspection' results on the 11th, Mr. A, a level 6 project manager at Cheongju City, misappropriated a total of 497.16 million won over approximately six years from November 2018 to May last year, including donations, public organization funds, budget expenditures, and local subsidies, through 45 separate instances.

Mr. A forged official documents and unauthorized used the Cheongju Mayor's seal to open a bank account in the name of Cheongju City Hall, which he then used to embezzle flood recovery donations. Additionally, he falsely entered project expenses into the local financial management system (e-Hojo) and secretly processed his superior's electronic approvals to embezzle project funds under his management.

He also misused Cheongju City Hall and subsidy project accounts and seals in his possession to misappropriate public organization funds and local subsidies. The Board of Audit and Inspection reported that Mr. A used the embezzled money for cryptocurrency investments and personal debt repayment.

The Board of Audit and Inspection demanded that Cheongju City dismiss Mr. A. They stated that they requested an investigation from the prosecution in July last year regarding the embezzlement charges. Mr. A was sentenced to 5 years in prison in the first trial last December, and the second trial is currently in progress.

The Board of Audit and Inspection identified the causes of the embezzlement as negligence in the management and use of the Cheongju Mayor's seal, supervisors' carelessness in accounting and security management, and inadequate internal control systems. The manager of the mayor's seal routinely left it unprotected without proper security measures. The Board also pointed out that the seal manager allowed Mr. A to stamp withdrawal slips without following proper procedures, enabling embezzlement of over 100 million won.

Furthermore, Mr. A's four direct supervisors were negligent in their duties, approving his fraudulent expenditure requests without verifying legitimate creditors and sharing PC passwords with department staff. The Board explained that supervisory negligence allowed for the embezzlement of over 240 million won.

In addition, Cheongju City was found to have closed an investigation into Mr. A's transfer of project funds to his personal account by merely noting missing supporting documents without investigating the cause. The Board criticized Cheongju City for inadequate internal inspections that failed to detect Mr. A's embezzlement early, thus allowing him to continue his criminal activities.

The Board of Audit and Inspection demanded disciplinary action against the seal manager and issued warnings to Mr. A's four direct supervisors. They also issued an institutional caution to the city to thoroughly manage related operations to prevent future failures in timely detection and prevention of embezzlement due to inadequate internal controls.

Jin Young-gi, Hankyung.com reporter young71@hankyung.com