Chung-Ang University foundation probed for accounting fraud

By Lee Kyung-min

The Chung-Ang University foundation was allegedly used to commit accounting fraud worth 20.3 billion won ($18 million), the prosecution said Sunday.

It added that former university President Park Bum-hoon will be questioned as early as this week on whether he played any role in the alleged fraud.

Data shows the university gained profits worth 20.3 billion won from rent, and down payments paid by on-campus facilities such as snack bars, cafeterias and bookstores, as well as those being treated in the university hospital.

The income was supposed to be recorded in the school’s accounts book, but it was instead included in the foundation’s accounts book from 2009 to 2015 in violation of the Private School Act, under which university funds should be managed separately from a school foundation.

The prosecution believes that some of the money was likely spent on paying employers of Doosan who managed university affairs. Doosan purchased the university in 2007.

Prosecutors suspect that expenditure from the foundation on workers’ pay was small.

The foundation spent 59 million won in 2009; 53 million won in 2010; and 16 million won in 2011. No expenditure has been spent for paying its employees since 2012. The foundation has five departments, but refused to reveal the number of workers.

Also, it failed to pay the university employees who were dispatched to the foundation; the university paid them, which is another violation of the law.

The prosecution said the alleged fraud incurred damage to the university and on its students because the money should have been spent on them.

An official from Doosan Group denied the allegations, saying the group and the university are managed separately.

“The university has full control over its budget as well as its manpower management. As to the irregularities, I cannot comment on any of those because I have no knowledge about them,” the official said.

An official from Chung-Ang University said the universtiy profit has been transferred directly to the university account since early this month after criticism erupted over its alleged fraudulent management.

Meanwhile, Park had been under investigation for a series of bribery and corruption allegations surrounding him and his family members with Doosan Group.

He was questioned for allegedly peddling influence with the Ministry of Education to approve the integration of the universities’ two campuses in Seoul and Anseong, Gyeonggi Province in 2012.

The prosecution said Park used his position as a former presidential secretary from 2011-13 to get the deal approved even though it failed to meet requirements.

The ministry initially demanded that university secure more land on its Seoul campus, but later approved the deal without the additional land being acquired.

The school is suspected of saving tens of billions of won in the move.

The prosecution plan to summon Park and Doosan Heavy Industries & Construction Chairman Park Yong-sung over their alleged roles in the deal

Prosecutors are also trying to ascertain whether Chung-Ang hired Park's first daughter as a professor in return for his help.