By Kim Rahn
Former South Jeolla Province Governor Park Joon-yung has been accused of a breach of trust in causing financial losses to the provincial government by holding the Formula One (F1) Korean Grand Prix.
The civic group, "Bright Future Made by Citizens," filed a complaint Tuesday with the Gwangju District Prosecutors' Office, targeting Park and 10 other people on the organizing committee and in provincial government who were in charge of hosting the racing championship.
The complaint comes after the province saw its deficit rise by 190 billion won ($175 million) between the first event being held in 2010 and the last time it was hosted in 2013. The province did not host the championship in 2014 due to a budget shortage, and will not this year either.
"In 2011, the Board of Audit and Inspection (BAI) pointed out the improper process of the event hosting and its budget use," the group said in the complaint.
"Another report by civic groups and professors last year showed that it was impossible from the beginning for the organizers to produce profits from the event, and that the organizers set a much too high ratio for public investment for the championship, eventually resulting in financial trouble for the province," it added.
The group also said that M Bridge Holdings, the promoter of the Korean F1, inflicted financial damage to the provincial government by inviting improper investors when setting up a company to run the championship. It also changed contracts with the government and revised the ownership structure.
"M Bridge Holdings and the provincial government agreed that the latter would take full responsibility for problems about sanction fee payments and budget management for the event. There was no reasonable reason for such an unfair contract," it said.
"The F1 organizers failed to keep their official duty to abide by legal procedures and try not to cause financial damage. They ignored related central government organizations' advice and pushed ahead with the project, causing huge losses. So they should be held accountable."
The financial feasibility of the racing event has long been under suspicion.
A BAI report in 2011 expected the event to cause a 1.1 trillion won accumulated deficit if held annually through 2016. It advised the provincial government to reconsider the project.
In 2013, the National Assembly Budget Office also pointed out the economic infeasibility, saying organizers signed the contract under unfavorable conditions without scrutiny on how to secure funds for the event.
It said they exaggerated the event's economic effects and took groundless presumptions to draw up such effects, presuming the ratio of foreigners among the total audience to be 25 to 31 percent without clear grounds.
According to the office, the provincial government signed the contract to host the championship without the central government's approval, saying it would finance the event with private sector investment. But it failed to attract enough private investment and later sought the central government's financial support, forcing the latter to spend 100 billion won.
Former South Jeolla Province Governor Park Joon-yung has been accused of a breach of trust in causing financial losses to the provincial government by holding the Formula One (F1) Korean Grand Prix.
The civic group, "Bright Future Made by Citizens," filed a complaint Tuesday with the Gwangju District Prosecutors' Office, targeting Park and 10 other people on the organizing committee and in provincial government who were in charge of hosting the racing championship.
The complaint comes after the province saw its deficit rise by 190 billion won ($175 million) between the first event being held in 2010 and the last time it was hosted in 2013. The province did not host the championship in 2014 due to a budget shortage, and will not this year either.
"In 2011, the Board of Audit and Inspection (BAI) pointed out the improper process of the event hosting and its budget use," the group said in the complaint.
"Another report by civic groups and professors last year showed that it was impossible from the beginning for the organizers to produce profits from the event, and that the organizers set a much too high ratio for public investment for the championship, eventually resulting in financial trouble for the province," it added.
The group also said that M Bridge Holdings, the promoter of the Korean F1, inflicted financial damage to the provincial government by inviting improper investors when setting up a company to run the championship. It also changed contracts with the government and revised the ownership structure.
"M Bridge Holdings and the provincial government agreed that the latter would take full responsibility for problems about sanction fee payments and budget management for the event. There was no reasonable reason for such an unfair contract," it said.
"The F1 organizers failed to keep their official duty to abide by legal procedures and try not to cause financial damage. They ignored related central government organizations' advice and pushed ahead with the project, causing huge losses. So they should be held accountable."
The financial feasibility of the racing event has long been under suspicion.
A BAI report in 2011 expected the event to cause a 1.1 trillion won accumulated deficit if held annually through 2016. It advised the provincial government to reconsider the project.
In 2013, the National Assembly Budget Office also pointed out the economic infeasibility, saying organizers signed the contract under unfavorable conditions without scrutiny on how to secure funds for the event.
It said they exaggerated the event's economic effects and took groundless presumptions to draw up such effects, presuming the ratio of foreigners among the total audience to be 25 to 31 percent without clear grounds.
According to the office, the provincial government signed the contract to host the championship without the central government's approval, saying it would finance the event with private sector investment. But it failed to attract enough private investment and later sought the central government's financial support, forcing the latter to spend 100 billion won.
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