Fraud by property managers still high

Home > Business > Economy

print dictionary print

Fraud by property managers still high

A 46-year-old employee was in charge of managing the finances of an apartment complex in Cheongju, North Chungcheong. However, between January 2011 and May 2016, she pocketed 270 million won ($247,490) to pay off her personal debt. She had no trouble getting the approval on the management costs that she reported to the head of the management center. However, when she withdrew cash from the apartment management’s bank deposit, she took more than what she was approved for. When the local government started investigating all apartment managers in the city last July, she went into hiding.

The former employee was arrested at a restaurant in Incheon in January and was indicted the following month. The head of the apartment management center was suspended for four months beginning in November for negligence.

A former head of the apartment management center and the representative of the residents of an apartment complex in Yangcheon District, southwestern Seoul, withdrew 25 million won from the apartment’s maintenance account between July 2014 and August 2015. However, they did not disclose how they used it and failed to provide receipts. They were fined 5 million won.

According to a committee led by the Ministry of Land, Infrastructure and Transport and consisting of local governments and the Korea Institute of Certified Public Accountants on Thursday, although frauds committed by the apartment management including embezzlement or inappropriately handing the balance sheets has shrunk, the crimes are still committed.

In fact, among the 9,040 apartment complexes nationwide with more than 300 housing units that received outside auditing, 676 or 7.5 percent failed to pass and were considered inappropriate. Although this does not mean that all of these apartments have committed crimes, it clearly indicates that the spending on managing the apartment hasn’t been transparent.

It is, however, a drop from the previous year where 19.4 percent or 1,610 fell under the same category.

In 2015, the government and the local government investigated 492 apartment complexes that were considered to have committed fraud and were able to find 1,255 cases in 312 complexes or 71.7 percent of the total suspected apartment complexes.

Through a special arrest conducted by the police between November 2015 and February 2016, 153 people were indicted or imprisoned in 43 cases.

This year apartments under suspicion have surged 90.2 percent or 816 apartment complexes. Of the total 713 complexes are found to have committed inappropriate acts.

The largest problems that were found were in budget and accounting, which accounted for 47.4 percent, or 1,627 cases, including a 270 million won embezzlement committed by the former employee of the apartment in Cheongju. Construction and maintenance followed with 892 cases or 26 percent. This was a reverse from the previous year where there were more illicit acts committed in construction and maintenance areas.

In some of the cases the problem was insolvent auditing by the accounting firm. In one case an accounting firm was handling 156 apartment complexes that led to failing to properly audit.

The government’s investigation against apartment management fraud started when actress Kim Boo-seon exposed corruption within apartment management over heating bills in 2014 where some of her neighbors were paying nothing.

This prompted the government to overhaul related regulations that made outside auditing mandatory for complexes with more than 300 housing units.

“Currently we are pushing for another reform bill where the outside auditors are required to report to the local government, unlike in past practices where they reported to the committee representing the apartment residents,” said Kim Jong-hak, director at the Land Ministry.

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)