Korean Council embezzlement scandal underlines need for greater oversight

Pressure is mounting on South Korean activist-turned-lawmaker Yoon Mee-hyang to rescind her post in the Democratic Party of Korea (DPK) in the light of allegations that she took advantage of abused women by redirecting donations intended for victims of wartime sexual violence. 

The controversy erupted after one of the few surviving ‘comfort women’, nonagenarian Lee Yong-soo, publicly accused aid organisation the Korean Council—which Yoon headed for years—of exploiting the women for three decades by using their painful stories to collect donations and then misspending the funds. The scandal continues to snowball and should inspire regulators around the world to take a closer look at NGOs and aid organisations to make sure that much-needed funds are not disappearing into someone’s pocket.

Hampering healing and peace

Amongst the variety of allegations lobbed against Yoon and the Korean Council, particularly troubling are reports concerning the purchase of a house at well above market value. The house was ostensibly intended to serve as a shelter for the elderly survivors. Instead, Yoon’s father apparently hosted unrelated events at the dwelling—some reports have even suggested that Yoon’s family used the house as a residence—before it was finally sold at a huge loss.

Furthermore, allegations have cropped up that Yoon used some of the funds raised to support the abused women to pay her daughter’s university fees. And Yoon may have embellished tales of her work with the organisation in order to win her seat in parliament—Lee, the elderly survivor who spoke out against the alleged embezzlement, recently emphasized that she had never endorsed Yoon’s political run, a claim which the activist turned politician apparently made. Perhaps most disturbing of all, Yoon and the Korean Council have been accused of putting pressure on the few surviving women to reject Japan’s offers of restitution, presumably to leave the situation unresolved so that their misappropriation of funds could continue.

Spreading controversy

Lee’s accusations have made waves, and several criminal complaints have been filed against the civic group and Yoon Mee-hyang. Prosecutors and investigators raided the district offices and shelters of the Korean Council in May. The organisation has admitted so-called ’accounting errors’, but has denied outright embezzlement. A spokesperson claimed that just over 40 percent of donations have been used to support survivors with the rest being dedicated to projects – including research and education programmes – designed to raise awareness. Outrage over the allegations, however, hasn’t abated.

A recent survey indicated that seven out of 10 Koreans believe that that Yoon, who took her seat in the Korean National Assembly on May 30^th, should resign, including more than half of her own party. DPK officials initially tried to downplay the allegations, calling for prudence and fact-checking before any decisions were made about Yoon’s political future.

As the furore has grown, however, it’s becoming increasingly clear that the scandal could prove a major liability to South Korea’s ruling party, just months after it notched up a landslide victory at the polls. Key DPK ally the Justice Party has already expressed its lack of confidence in Yoon and declared that the ruling party “must show a more responsible attitude”. On June 8^th, South Korean President Moon Jae-in addressed the corruption allegations for the first time, vowing to increase the transparency of civic organisations.

A scandal for our times

 

This is a call that countries around the world should heed. If the allegations about the Korean Council prove true, they would only serve to confirm what previous incidents have shown – that there needs to be far more scrutiny of non-governmental organisations (NGOs) and aid organisations to make sure that bad apples aren’t misusing desperately needed funds.

Unfortunately, the Korean Council scandal is far from the only case of its kind. Donor funding to NGOs in Uganda was suspended in 2019 after a forensic audit by the Democratic Governance Facility (DGF) exposed widespread corruption: examples included one human-rights organisation that submitted unsupported expenditure to the tune of $272,000.

Also hitting the headlines last year was the case of Ernest Halilov, a former logistics officer for an Irish NGO who faced corruption chargesrelating to hundreds of millions of dollars’ worth of relief supplies for Syria. Halilov is now facing extradition to the United States on charges of bribing the staff of the aid charity Goal with cash and luxury goods in exchange for confidential information about the bidding process for procurement contracts involving US taxpayer funds.

Even workers employed by the UN to mitigate the humanitarian crisis in Yemen have been accused of conspiring with combatants on all sides to divert food, medicine and money from its intended recipients. Yemeni activists have started a campaign – ‘Where Is the Money?’ – to push for greater transparency on how money pledged to UN agencies by international aid programmes has been spent.

Working for change

With aid associations operating under pressure--particularly in conflict and disaster zones- it’s easy to see why they’re reluctant to admit the proliferation of corrupt practices, the reporting of which would require onerous accounting procedures and could lead to de-funding. A study by Reuters in 2015 revealed that a third of the world’s top 25 aid charities refused to make their fraud data public, despite annual losses amounting to millions of dollars.

Nevertheless, careful oversight is an essential provision if charities are to be held accountable to the people they are working with, and those funding them. Scandals – such as the one plaguing the Korean Council— can play an important role in prompting governments and aid agencies to move towards greater scrutiny.

During a recent meeting with his senior aides, President Moon reportedly called the current controversy “an opportunity to reflect on the operations and activities of civic organizations”. It remains to be seen whether Yoon or her associates will be brought to book, but the scandal could mark the start of a push to improve the governance of fundraising activities in the country—and beyond.

(Disclaimer: The opinions expressed are the personal views of the author. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse does not claim any responsibility for the same.)