Lost 200 million won by investing in a fund invested by an organization affiliated with the Ministry of Environment

It has been confirmed that the Korea Recycling Resources Distribution Support Center, an agency under the Ministry of Environment, has lost more than 200 million won in less than a year following investing the contributions made by companies into the fund. Although they violated regulations and joined the fund without permission from the Minister of Environment and suffered losses, none of the executives and employees were held responsible. Accounting manipulations to hide losses were also revealed.

According to the ‘Status of Business (Producer) Recycling Fee Management’ submitted by the Ministry of Environment on the 29th by Kim Hyung-dong, Rep. of People’s Power, the Circulating Resources Distribution Support Center invested 12 billion won in recycling levies in the government bond fund managed by Hanwha Asset Management in August 2016. did. However, within a year, the fund was repurchased at a loss of 25.33 million won. Since the end of 2016, less than four months later, when the fund suffered a loss, it bought back the fund on two occasions.

The Ministry of Environment is implementing the ‘Producer Responsible Recycling System (EPR)’, which shares the cost of recycling packaging materials among companies. Lotte Chilsung Beverage, CJ CheilJedang, Coca-Cola, and Nongshim pay billions of won each year, and the Circulating Resources Distribution Support Center manages them.

Article 43 of the articles of incorporation of the Circular Resources Distribution Support Center stipulates that ‘profitable businesses must obtain permission from the Minister of Environment’ to prevent the institution from freely using the levy resources. However, it was found that the Circulating Resources Distribution Support Center did not receive any permission from the Minister of Environment before investing in the fund. Another problem was that there were no specific regulations on how to manage the contribution of companies.

Circumstances of accounting manipulation to hide losses in order to avoid liability were also found. According to the relevant accounting regulations, the amount of fund investment losses should be treated separately as ‘loss on the disposal of short-term financial products’. However, the Circulating Resources Distribution Support Center treated this loss as an unrelated ‘normal deposit’ and offset the loss by combining it with interest income from other deposits. It was confirmed that there was a loss of more than 200 million won, but no one was held responsible.

Rep. Kim said, “The public interest funds collected from companies have been used like small money from an organization affiliated with the Ministry of Environment.

Reporter Sung Sang-hoon [e-mail]