Court income under scrutiny

The Supreme Court said yesterday that it will conduct an audit and inspection of interest earned from the deposits of defendants in civil lawsuits.

An exclusive report on Monday by the JoongAng Ilbo said that the nation’s highest court has used interest earned on defendants’ payments to plaintiffs since 2008 for unclear purposes, without any inspection from the Board of Audit and Inspection.

“We will allow private accountants to inspect and audit [the interest] and employ more figures from outside the court,” the court said.

If the court rules in favor of a plaintiff and orders the defendant to compensate for damages in a civil suit, defendants have the option of depositing the funds with the court if the plaintiffs refuse to accept the court’s decision on the amount of compensation. The case is considered closed when the defendants deposit the money with the court, allowing the plaintiff the option of withdrawing the compensation at his will.

The money has been managed by a deposit-management committee since 2008. The current total amount of deposits is estimated to be more than 8 trillion won ($7 billion).

The committee said it put the deposits in banks to gain interest and gave 90 percent of the interest earned to the Supreme Court. The deposit is another source of income for the court in addition to its regular budget from the central government.

The JoongAng Ilbo said Monday that it exclusively obtained the committee’s accounting books with the help of Grand National Party lawmaker Lee Eun-jae. According to the committee, the court has spent about 135 billion won in interest earnings since 2008 for ambiguous purposes and not official expenses.

According to the accounting book, the Supreme Court spent 13 billion won to improve the deposit management system, 57 billion won for public defense and 21 billion won for other expenditures. But the breakdown shows that the court used some of the money to rent a luxury office for a public defender in Gangnam, southeastern Seoul. Lots of dubious expenses were also found, such as 42 billion won for “research fees,” activating “management systems” or for “public businesses.”

The audit board said the court gave financial assistance to unauthorized organizations - about 10 billion won - last year. Another problem is that the court should have been inspected by the audit board because the interest income from the deposit is regarded as state revenue.

“We found some accounting problems with income, but we could not conduct a financial audit on income because the court argued it was not state revenue [so it does not need inspection],” the board said.

The Ministry of Strategy and Finance also said yesterday that the interest income is not considered as additional income beyond the regular budget, which means the income is actually state revenue.

The Supreme Court established the committee - which consists of a chief and nine members - in 2008 to be more transparent in its management of the deposits.

The chief justice and other two members on the committee are current judges on the Supreme Court, which means how and where to spend the interest income is mostly led by the decisions of the three judges, not by the other seven members.

Most of the seven members said they do not know details about the expenditures.

“We do not know details,” a committee member said. “Ask the financial management team in the court.”

Park Jeong-su, a professor at Ewha Womans University, said: “It is a very rare case that a committee deals with all official accounts without any supervision.”

By Jeon Jin-bae, Choe Sun-uk [heejin@joongang.co.kr]