Ministry, rail operator in ugly fight
Kwon Do-youp Chung Chang-young Minister of land, transport and Korail CEO maritime affairs
Murky accusations
rise over money-losing
train services
By Lee Hyo-sik
The Ministry of Land, Transport and Maritime Affairs and Korail are engaged in another round of disputes. This time, it is about whether the state-run railway operator embezzled state subsidies earmarked for running train services that, other than the KTX, are losing money.
The ministry claims the public enterprise has misused hundreds of millions of dollars of taxpayers’ money each year to boost wages for its staff and pay for other administrative expenses, rather than finance the operation and maintenance of slower train routes.
Korail, employer of nearly 35,000 workers, argues it is just a simple misunderstanding, stressing it has never misused state funds.
The ministry said Sunday that it has referred 15 Korail employees to law enforcement authorities for prosecution on charges of embezzlement of government subsidies. It also demanded the railroad operator reprimand dozens of other employees who played part in the suspected misappropriation.
``After auditing 15 state-run companies under our supervision, we found Korail, the Korea Institute of Construction Technology and the Korea Transportation Safety Authority misappropriated state subsidies,’’ a ministry official said. ``The railway operator misused by far the largest amount.’’ The ministry also asked the prosecution to investigate three employees at the Korea Institute of Construction Technology on embezzlement charges.
The government extended a total of 987 billion won ($931 million) to Korail from 2007 to 2011 to help it operate money-losing train lines. By law, Korail is required to cover 70 percent of costs incurred for operating and maintaining non-KTX train services. The government is responsible for the remaining 30 percent.
The ministry said of the 987 billion won, Korail embezzled 222.6 billion won to pay salaries and cover other operating costs.
``Korail unlawfully transferred 811.2 billion won to its bank accounts from the government-designated one and didn’t use it for money-losing non-KTX services. It transferred back only 588.6 billion won, while misappropriating the remainder,’’ the ministry official said.
Korail flatly rejects the ministry’s findings.
``We spent state funds deposited at the government-designated account to pay for various expenses. But we transferred the amount back later. All the money we received from the government was spent for the intended purposes,’’ a Korail spokesman said. ``We have confirmed this with our accountants. We did not even misappropriate a penny.’’
The spokesman said Korail will request the ministry review its audit and ask the Board of Audit and Inspection to launch an independent probe into the matter.
The transport ministry and Korail have been at odds since December 2011 when the former announced a plan to allow a private enterprise to operate KTX bullet trains in 2015.
Following the completion of a new KTX line between Suseo and Pyeongtaek, Gyeonggi Province, a private company will operate KTX trains from Suseo to Busan on the Gyeongbu Line and to Mokpo on the Honam Line.
The ministry is seeking to break the 113-year monopoly maintained by Korail in a bid to boost operational efficiency, improve service quality and lower fares.
Korail has argued that the privatization of KTX operations could raise ticket prices and extend undue benefits to private entities.