The Daegu-Gyeongbuk Free Economic Zone Authority (DGFEZ) was established to attract foreign capital and companies to Daegu and Gyeongbuk. A government observer group found that the DGFEZ went on overseas business trips for the purpose of sightseeing and spent government funds that violated regulations. In addition, the DGFEZ is being accused of having the lowest amount of incoming foreign capital in all of Korea.
A corruption observer group from the Office for Government Policy Coordination Prime Minister’s Secretariat revealed that from May 2015-2017 eight overseas trips were made on the basis of attracting foreign capital investment, 47 from the Free Economic Zone Authority. Of these, 27 are from the DGFEZ. The number of employees who went abroad was 18, regardless of whether the city councilors and the local councilors were involved in foreign affairs. Six cases revealed that employees were reported to have visited the same place more than once or changed their schedule to go sightseeing.
Former executives said they were all normal business trips and denied any wrongdoings. Even if these were legitimate trips, the DGFEZ secured foreign investment of only USD 230 billion dollars since it was established in 2008, and it is the lowest record among all free economic zone authorities in Korea.
It has also been revealed that government subsidies were unfairly provided and the DGFEZ offered preferential treatment. The DGFEZ created false documents when they received a subsidy of KRW 7.5 billion from the government for road construction for an industrial complex in 2016. In 2014, they showed preferential treatment to specific companies by awarding KRW 61.9 billion worth of construction contracts.
An officer from the DGEFEZ said that government has recovered some of the subsidies awarded to the DGFEZ and a governmental inspection department will penalize the offending officers. The DGFEZ can’t avoid accusations that they only looked out for their own interests without doing their work properly.