Cluster sites left undeveloped for up to 10 years; loan-interest subsidies paid to firms that halted construction
Group that misused 54.72 million won in grants received 700 million won more; three civil servants issued caution
A state audit has exposed widespread administrative failures by Wonju city and Gangwon Province, including innovation city cluster sites left idle for more than a decade and subsidies continuing to flow to companies that had halted construction. Auditors also found that a group which had misused tens of millions of won in grants received hundreds of millions more, and that a cleared mountainside was abandoned without a factory ever being built.
The Board of Audit and Inspection said Monday it had conducted a comprehensive audit of Wonju — its first regular inspection of the city since 2015 — covering major projects and administrative operations. The audit uncovered eight instances of illegal or improper conduct and called for caution to be issued to three officials responsible.
Gangwon Province had managed the pre-sale sites in the Wonju innovation city cluster with serious negligence, according to the audit findings. Of 13 cluster lots sold before 2025, six — or 46.1 percent — had either never broken ground or had construction halted for up to more than 10 years after purchase. In one case, a hospital acquired a site in June 2014 but failed to begin construction for more than a decade. Rather than issuing a corrective order or revoking move-in approval, Gangwon Province continued to report the site to the Ministry of Land, Infrastructure and Transport as "scheduled for ground-breaking." As a result, the actual occupancy rate of the Wonju innovation city cluster stood at 45.6 percent, below the national average of 57.1 percent.
The province also continued paying loan-interest subsidies to companies that had stopped building. It paid 36 million won ($26,600) in interest support to one company that broke ground in 2017 but halted construction in 2019, and about 28 million won to another that held only a ground-breaking ceremony in 2023 without carrying out any actual construction — bringing the total in improperly continued interest subsidies to about 64.96 million won.
The management of startup small and medium-sized enterprises and guidance on tax benefits also drew fire. Wonju city failed to revoke factory establishment approvals for four startup SMEs — including one that had already shut down — even though none had built a factory within four to 13 years of receiving approval. One company received a reduction in alternative forest resource development fees worth 290 million won, then cleared 23,931 square meters of forest land and felled 639 trees, only to abandon the site without building a factory, triggering complaints about soil erosion. Meanwhile, seven other small businesses risked losing local tax exemptions worth more than 100 million won because the city had failed to inform them of the available benefits.
Serious gaps in local subsidy management were also uncovered. After Wonju city granted 600 million won in subsidies to a martial arts organization in 2023, it confirmed that the group had improperly spent a total of 54.72 million won ($40,500) — including payments to an athlete's spouse with no relevant credentials for announcer services and fraudulent claims for arena rental fees. Under the Local Subsidy Act, additional grants are restricted when the amount subject to recovery exceeds 2 million won. Nevertheless, Wonju city disbursed an additional 700 million won to the same organization in August 2024, citing an upcoming competition.
The Board of Audit and Inspection directed Gangwon Province to conduct a status review of long-stalled tenants and establish follow-up management measures, and told the Ministry of Land, Infrastructure and Transport to clarify the criteria for suspending loan-interest support when construction is halted. The board also called on the Wonju mayor to draw up plans to revoke approvals and restore sites where factory construction had not been carried out, and urged caution for three civil servants who had improperly re-issued subsidies to the group found to have misused public funds.
sunpine@heraldcorp.com
