Culture Ministry, Seoul book fair organizer clash over audit

Tensions between the Culture Ministry and the Korean Publishers Association, the organizer of the Seoul International Book Fair, reached a boiling point Tuesday as the two exchanged allegations and criticisms over the association's earnings disclosure.

On Tuesday morning, the ministry said in a statement that the chairman of the KPA is attempting to "evade responsibility" and "distort facts" over the ministry's audit of the book fair, in which it said it found financial irregularities.

This came 20 hours after the association rejected the ministry's allegations that the KPA, which receives government subsidies, has been withholding important financial details. The KPA in the statement called for the dismissal of Park Bo-gyoon, the minister of culture, sports and tourism.

Earlier on Monday, Park alleged that the KPA did not disclose breakdowns of its earnings from the book fair since 2018, during a press conference held to discuss plans to promote the country's publishing industry.

The minister also accused the Publication Industry Promotion Agency of Korea (KPIPA) -- a public institution under the ministry that oversees the distribution and use of government subsidies to the fair organizer -- of lax supervision, raising questions about possible collusion.

At the core of the disagreement is whether the KPA, a private organization, has any legal obligation to share the excess profits it earned from the book fair with the ministry, from whom it receives subsidies, as well as give a detailed report of those income earnings.

KPA, through the KPIPA, is given approximately 1 billion won ($780,360) in government subsidies for the book fair each year, according to the ministry. However, the KPA insists that the subsidies total about 770 million won.

The ministry pointed out that when it requested the information from the KPA, the association provided a financial report with “large parts” redacted.

After conducting an on-site investigation and comparisons with transaction records, they discovered that information had been deliberately removed. Among the missing information were details of deposits in the hundreds of millions of won, including participation fees from overseas exhibitors of the book fair.

The ministry said it notified the KPA of its legal obligation to return excess profits from the book fair, since the ministry provided subsidies for the event.

It cited Article 18 of the Subsidy Management Act, which states "if substantial profits accrue to a subsidy program operator upon completion of the relevant subsidy program, the subsidy program operator fully or partially return to the State the amount of subsidies he or she has received, to the extent that such act does not defeat the purposes of granting such subsidies.”

The KPA countered these claims in a statement, saying that it is not obligated to disclose all transaction details since it is not affiliated with the Culture Ministry, emphasizing that “the association operates independently with its own accounting and auditory systems.”

It argued that what the ministry claims it is hiding has been “transparently managed” through a separate auditing system, which is reported to the board of directors of the association.

It asserted that it had submitted all the necessary information “required for disclosure” at the ministry’s request and received an official confirmation from the KPIPA. All SIBF matters had gotten the approval of the ministry and the KPIPA, it added.

Regarding the legal obligation to return excess profits from the book fair’s revenue, the KPA said the SIBF is a “private event,” not a state-run one, that costs nearly 4 billion won in total with contributions from participating companies. It also emphasized there is no obligation to return excess profits to the government, even though some government subsidies were provided.

The KPA said it has disclosed detailed expenditure reports on how the subsidies were used, but pointed out that revenue generated from the fair should be treated differently because there are no regulations in the Subsidy Management Act or in government guidelines that require “detailed revenue reports.” The KPA added that the ministry had been providing subsidies for the fair regardless of its revenue, and “had not expressed any intention to seek a return of excess profits from the revenue.”

Minister Park emphasized that the ministry will closely track whether there was tacit collusion between the KPA and the KPIPA, and whether there were cartel-like factors involved.

Meanwhile, the KPIPA's Director Kim Joon-hee expressed his intention to resign to the Culture Ministry, last week.

Kim said he submitted his resignation "to take responsibility for the KPIPA receiving the lowest grade (Grade D) in a management evaluation for organizations under the Culture Ministry last month,” but stressed that the series of clashes on Monday and Tuesday were unrelated to his resignation.