The selection rules for Incheon City's treasury, which manages citizens' tax money, lack any mechanism to screen banks for integrity, prompting calls for urgent improvement. With a bank currently under tax audit set to join the treasury designation bid, and the selection process expected to gain momentum next month, time to revise the rules is running short.
The Citizens' Coalition for Economic Justice of Incheon (Incheon CCEJ) issued a statement Thursday, saying, "To avoid the controversy of handing the key to the city treasury—the vault that manages and operates citizens' tax money—to a tax thief, a careful and transparent selection process must be established."
The issue began with a National Tax Service audit. The Fourth Investigation Bureau of the Seoul Regional Tax Office recently deployed personnel to the headquarters of Financial Group A and Bank A to launch a non-regular tax audit. The Fourth Investigation Bureau is a special investigation unit deployed when there is concrete evidence of tax evasion or corruption, earning it the nickname "the grim reaper of the business world." A special tax audit targeting the banking sector is the first in more than a decade, making it highly unusual.
The problem is that Bank A is expected to participate in the bid to designate the city treasury, which manages Incheon City finances worth 15 trillion won annually. Incheon CCEJ pointed out that "there have been a series of reports that a bank under a special tax audit intends to participate in operating the next treasury."
However, the selection rules themselves have no mechanism to filter this out. The Public Administration and Safety Committee of the Incheon City Council passed a partial amendment to the "Ordinance on the Designation and Operation of Incheon City Treasury" as originally proposed on the 18th of last month, but it did not include any provision to screen banks' integrity, such as tax evasion. Rather, the amendment allows for a wide gap in scores under the "local community contribution record" evaluation, and Bank A's headquarters relocation plan is being mentioned in connection with the treasury designation.
The 9th Incheon City Council, which amended this ordinance, was dominated by the People Power Party. In contrast, the responsibility to plug the "hole" of the missing integrity screening has been passed to the 10th City Council, dominated by the Democratic Party. Amending the ordinance is the job of the city council, the legislative branch, but the actual treasury selection falls to the executive branch under Incheon Mayor Park Chan-dae. With Incheon City expected to convene the treasury selection committee around next month, there is not much time to revise the rules.
Accordingly, Incheon CCEJ urged the 10th City Council to establish a fair and transparent selection process, including amending the evaluation criteria to enable integrity screening and forming a treasury designation review committee.
This tax audit also aligns with the government's stance emphasizing the public role of the financial sector. At a Cabinet meeting on May 6, President Lee Jae-myung pointed out, "The very idea that making money is all that matters for financial institutions, that this is the purpose of their existence, is itself a problem," adding that "their public role is far too weak."
In response, Financial Group A stated its policy to participate in the city treasury bid but drew a line against the view linking the tax audit to integrity. A Financial Group A official countered, "The tax audit has not produced any results, and it is still at the investigation stage, so linking it to an integrity issue is speculation," adding, "Tax audits happen all the time, and the launch of an audit does not necessarily mean there is a problem."
