Last semester, HUFSans received successive, shocking news reports of public budget embezzlements from their own student representatives. The vice president of the Emergency Planning Committee (EPC) was confirmed to have siphoned 2 million won (US$2,100) from the public budget. Moreover, student representatives surnamed Lee and Hyeong, the former president of the College of Occidental Languages student council and the director of College of Chinese student council respectively, said they were voice phished and lost their public budgets.
Their cases were covered by major national press organizations, which stirred up issues all across the country. Public budgets were meant to be collected and used for the good of HUFSans. However they ended up falling into misuse. Trust toward student representatives is now broken. The Argus made an in-depth analysis of the causes of the problems and provided a solution.
Currently, there are four types of budget that are being run by student bodies: school subsidies, student autonomous subsidies, student council budgets and donations. At this time, donations are the only area that is not subject to outside inspection.
Donations are meant to be spent for the good of HUFSans and student bodies. However, the donation budgets are basically run only according to the discretion of the representatives. A member of the student council with a good moral sense is unlikely to make any trouble handling these funds, but there is also a big risk of malfeasance.
According to the final report uploaded on June 23 of the College of Education Investigation Committee (CEIC), formed to probe the corruption charge of Nam, the suspect embezzled approximately 7 million won (US$6,110) from the college?s public budget. Out of the money, 4.2 million won, which is more than half of the total embezzlement, was misappropriated from the donations. He could have easily pocketed public money because donation spending is not subject to scrutiny at that time, and he knew the loopholes of budget management system.
“Most student councils spend donations without proper auditing,” said the committee in their final statement on the day of upload. “Members of student council could not gain any information after endowment because there was no proper inspection. Thus, the members could only make assumptions as to how donations were spent when they are carried-over from the underspent balances of the previous year.”
The budget factors of student councils are inspected by the relevant authorities according to their source. School subsidies mean school-distributed subsidies that consider the relevant number of members from the school. Thus, thorough inspections by the Finance and Accounting Team and the Academic Support Center and Registrar are required.
Student autonomous subsidies are selectively paid by HUFSans when paying their tuition. These funds are redistributed by the school based on a particular ratio, and the Central Inspection Committee of the General Student Council (GSC) is responsible for all audits.
The student council budget is collected from freshmen and is paid only once. It is under inspection by the relevant management committees of colleges.
Individually-owned budget accounts
Public budget accounts are individually-owned, providing access only to a single related staff member. This situation always allows for the possibility of embezzlement.
Generally, most of student council budget accounts are opened under an individual’s name, according to a self-led examination by The Argus.
“The idea that individually-owned accounts are not necessarily a problem is the commonly held belief within groups, and the whole process to open a group-owned account is too complicated to handle,” said Kim Don-kyum, head of the Department of Malay-Indonesian student council.
Hence, a single member of the student body has the power to deposit and withdraw from a public budget account as well as access the account’s records in a situation where transparency is crucial. It signifies that there is always the rigid possibility of budget mismanagement as long as the account belongs to an individual.
A student representative surnamed Nam, the former vice president of EPC, took 8 million won (US$7,000) of unspent money carried-over from the last billing period to his personal account on March 24. He handled the money himself while no one else had access to it until the board of executives was formed.
On May 15, the EPC confirmed that Nam had siphoned a total of 2.24 million won through 14 withdrawals, constituting a case of chronic embezzlement. It took roughly 50 days to uncover the malfeasance.
On June 30, the director of the College of Chinese student council surnamed Hyeong was voice phished by an individual who stole as much as 19 million won (US$16,500) from the public budget and it took three days for other staff members to learn about it. The discovery could have taken longer if Hyeong had been afraid to confess the truth.
Allowing access to a limited single individual is only one way in which issues related to corruption can occur. Serial corruption scandals have created huge public discontent, and all of the known scandals are consequences of the above mentioned problem. These situations could have been avoided if other related staff members had had access to the account.
Nam's embezzlement of EPC Budget was found after other staffs?inquiries.
Lee, College of Occidental Languages student council, was suspected of budgetary mismanagement.
The College of Occidental Languages Regular Management Committee took place to inspect Lee's case. Lee confessed to problems with budget management but could not explain the discrepancy between bills from the HUFS Finance and Accounting team, and the 51st College of Occidental Language Student Council.
The General Student Representatives' Meeting (GSRM) took place to discuss punishments for Nam, with a live broadcast. Nam left the meeting right away as soon as he learned about the broadcast and refused to attend the meeting if the live broadcast was on. He later came back to GSRM after the cameras were turned off.
Lee admitted that she manipulated bill reports, to cover up that she was voice phished. She said she was asked not to reveal any further details by police, since she had to make a pledge of silence for the police investigation. However, it turned out that the “pledge of silence” did not exist, after a few representatives checked.
GSRM removed Nam from the Emergency Planning Committee (EPC). New doubt on Nam was raised that he embezzled from the public budget of the College of Education. Nam mentioned that he never did that when he was chief of College of Education student council on May 17.
Nam posted his letter of apology for his EPC embezzlement case, saying he “thought in a wrong way.”
The College of Education Investigation Committee (CEIC) was formed. Its main objectives were: to check if embezzlement took place, if Nam tried to keep his actions hidden, and why it took so long to find the embezzlement.
The College of Occidental Languages Emergency Meeting was held to discuss level of punishment for Lee and to improve the budget management system.
The College of Occidental Languages Student Representatives' Meeting removed Lee from its organization, and demanded that she upload a letter of sincere apology.
Lee uploaded letter of apology, saying “It was a wrong move to hide the fact that I was voice phished.”
6.5 ~ 19
Nam attended the CEIC inspection. He intentionally stated false details, creating confusion.
CEIC uploaded its final report and Nam?s malfeasance was confirmed at the College of Education. His embezzlement was chronic, throughout his whole tenure in 2016.
Hyeong got voice phished and lost funds from the public budget of the College of Chinese student council.
Police investigation began on Hyeong's case.
Hyeong repaid all the lost funds to the College of Chinese Student Council.
The ambiguous characteristics of donations
Donations consist of money willingly given by students and alumni members. The main source of donations are scholarships that have been endowed by members, and contributions from alumni that are often nominal.
Donations from a number of Alumni are sometimes included, with additional irregular income through advertisement from sponsorship companies.
Basically, these scholarships are given as a form of gratitude for the hard work of student representatives, thus their right to receive proper compensation should be protected. However their endowments are spontaneous, and are often given to make up for the possible deficit within the total budget. In other words, donations are voluntarily made, hence they do not necessarily need to be under inspection.
Donations are not obligated to be inspected since they come from the voluntary will of board members,” said Kim Don-kyum.
As mentioned above, donations cannot be inspected since they are literally voluntary endowments. However, they are also spent for the public sector as well.
“We spend our donations when we are in need for things like upcoming services for HUFSans,” said Ahn Jung-hun, vice president of the College of Occidental Languages student council.
Even members of student councils cannot reach a single agreement whether the donations should be the subject of audits, since donations are both purely voluntary donations and components of a public budget.
Complicacy in opening public-owned accounts
Student councils are not seen as corporate bodies and are thus unable to open public accounts.
Student councils are unlikely to open public accounts, unless they borrow money in the name of HUFS for the same reason.” said Baek Yu-jin, president of EPC.
Organizations can open public accounts through getting a tax registration number and doing some paperwork. While student councils are not considered to be corporate bodies, they can be ‘organizations that are treated as corporations’.
“Organizations will get tax registration numbers after they fill out forms in tax offices, since tax offices are supposed to make the registration number for organizations through proper examinations. Banks will open public accounts when the tax registration number is prepared,” mentioned Kim Woo-yeong, a certificated professional administrative agent.
The registration number can function as a Certification for Business Registration.
However, the process to open a public account requires a relatively great deal of effort and time, thus sometimes licensed professionals deal with whole process. Lack of documents that have requirements that cannot be met easily, and expiry of legitimacy are the main reasons why groups seek professional help.
Plus, there is a long list of things to prepare: a seal for the organization, records of the representative election, ID cards for the representatives, a list of members and rules, and an agreement to establish an ‘organization seen as a corporation’. Tax offices will make the tax registration number for the relevant organization, then banks will begin the process of opening a public account.
Moreover, only an Authentication Certificate for Industries can be used, and the One-Time Password (OTP) cell- a replacement of the security card- should receive new batteries on a regular basis. The OTP cannot function unless its battery gets charged again in a relevant bank branch.
Mandatory donation inspection by students
The recent series of embezzlements have proven the possibility of budgetary abuse. Hence, student bodies are required to implement mandatory inspections on donations.
Donations clearly have the characteristics of being a part of the public budget. “Now, we have seen it falling into misuse so it is time for us to start self-led inspections,” said the president of the Department of the Malay-Indonesian student council also stressing the importance of audits.
Donations are purely voluntary, but student-led inspections of accounts, billing, and receipts should be done and all the information must be made public transparently since donations are meant for public use.” said Ahn, emphasizing the need for audits.
Mandatory inspections of donations will be welcomed not only by student representatives, but also regular HUFSans as well.
CEIC’s final report, written by regular members of the College of Education, also demanded the same, saying, “Although public money may come from private sources, this does not mean it can be considered private money.”
Obligatory opening of public budget accounts
All student body organizations are required to open public accounts so that the input and withdrawal records can be transparent. Concentrated authority of access should be distributed to other members of student bodies as well.
HUFS Club Association (HUFSCA) created their public account that is accessible to multiple staff members after the discovery of embezzlement scandal. Then-candidate for HUFSCA president, Kim Han-jung, made a pledge that their “budget will be run through a public account.” Kim and his partner got their tax registration number right after they were elected, creating the account they longed for.
“The scandal last year was a major motivator to walk through all the hardships to improve the system for the first time. We had to go through countless mistakes throughout our steps. Now, school subsidies and student council budgets are being run in separate public accounts, and transparency in budget management has been established since every related staff can access input and withdrawal records,” said Kim.
Furthermore, carry-overs after billing periods when representatives are switched will no longer be needed.
Kim Woo-yeong, a licensed administration professional, said, “Representatives’ expiration of tenure will not hinder the continuity or transparency of the budget when a successor is listed.”
“A representative of the council has a duty to be actively involved with academic and autonomous activities, based upon trust and veracity,” states Chapter 13 of the General Student Council Regulations, which deals with the moral code of representatives. Nevertheless, a few representatives have destroyed that mutual trust by abusing their power. Not only must the loopholes of the system fixed, but also the moral discipline of student representatives must be strong, so that what happened last winter will not be repeated at HUFS.
Reporter of Campus Section