ACRC to strictly manage public servants’ speculation in real estate using nonpublic information,
in accordance with the Act on the Prevention of Conflict of Interest Related to Duties of Public Servants

- Pre-announcement of legislation of Enforcement Decree of
Act on the Prevention of Conflict of Interest Related to Duties of Public Servants (September 10 ∼ October 20) -

(10th Sep. 2021, ACRC)

Conflict of interest situations of public servants will be managed and prevented. Such situations include public servants’ speculation in real estate using inside information, performing public duties in an unfair manner using private relations such as family members, and making a negotiated contract with family members of high-ranking public officials.

The Anti-Corruption and Civil Rights Commission (Chairperson : Jeon Hyun-hui, hereinafter ACRC) pre-announced the Enforcement Decree of the Act on the Prevention of Conflict of Interest Related to Duties of Public Servants(hereinafter the Act on the Prevention of Conflict of Interest) for 40 days from September 10 to October 20.

The Act on the Prevention of Conflict of Interest was enacted eight years after the ACRC submitted the bill to the 19th National Assembly in 2013. In accordance with the promulgation of the Act on May 18 this year, it will be enforced starting May 19 next year.

In order to prevent public servants from seeking unfair private interest and to ensure the fair performance of their duties, the Act contains 10 standards of behavior such as obligations to report and avoid persons with private interests, report possession and purchase of real estate, and restrictions on employment of family members of high-ranking officials and making negotiated contracts with them.

The Enforcement Decree of the Act on the Prevention of Conflict of Interest stipulates detailed regulations commissioned by the Act and needed to enforce it, in order to effectively implement the obligations of reporting and submission and to impose restrictions and prohibitions.

Under the Act, a public servant who works for a public organization that directly deals with real estate or manages real estate development such as housing site development and district designation must report to the head of his/her organization any possession or purchase of real estate in the district by the public servant, his/her spouse, or any lineal descendant/ascendant or spouse’s lineal descendant/ascendant living with the public servant, within 14 days from the day that he/she comes to know of the purchase and possession.

The Enforcement Decree designates 16 metropolitan city and development corporations, including Korea Land and Housing Corporation, Saemangeum Development Corporation, and Seoul Housing & Communities Corporation, as public organizations that directly deal with real estate.

Also, it categorizes the real estate development duties, such as housing site development and district designation, of public organizations, as projects of public housing, industrial complex development, urban regeneration, port redevelopment, and station area development, and provides the underlying clauses and provisions.

Accordingly, public servants of not only public organizations that directly deal with real estate, but also those that carry out real estate development projects such as central administrative agencies, local governments, and public-related organizations are also obliged to report. In turn, this is expected to strictly manage the real estate speculation of public servants using inside, nonpublic information.

In addition to persons with private interests prescribed in the Act on the Prevention of Conflict of Interest, those who can effectively influence the fair performance of public duties have also been added as persons with private interests. These include 1) a superior who leads/supervises public servants; 2) one who has made a monetary transaction exceeding the allowed value under the Improper Solicitation and Graft Act (excluding transactions with relatives); and 3) one who deliberated/resolved a public servant’s issue as a non-standing commissioner.

Furthermore, even if a public servant’s duty-related party is not a prescribed person with private interests, when the official in charge of preventing conflicts of interest judges that it is difficult for the public servant to perform fair public duty because he/she has a close relationship with the duty-related party in terms of academic, relative, religious, or working ties or as a close colleague who was employed at the same time, the public servant is obliged to report the fact to the head of the organization and apply for avoidance.

In addition, the Act on the Prevention of Conflict of Interest commissioned the Enforcement Decree to restrict public organizations from making negotiated contracts with corporate bodies of which the representative is a high-ranking official of the public organization or the spouse of the official, and to stipulate the exceptional cases. The exceptional cases are confined to when a specific person’s technique is needed or when there is only one producer of a certain product without any competitors.

Moreover, the ACRC specified the report’s range and contents regarding the report of transaction with a duty-related party, submission of a high-ranking official’s activities in the private sector, and report of private contact with a retired official. The ACRC also systemized the report and processing procedures so that anyone can easily understand the obligations of the Act and report its violations in a convenient way.

ACRC Chairperson Jeon Hyun-hui stated, “The ACRC is going to collect a variety of opinions from citizens and competent agencies during the pre-announcement of legislation in order for the Act on the Prevention of Conflict of Interest and the Enforcement Decree of the Act to have an effective institutional foundation.” She also added, “We will continue to make efforts for the Act to be settled so that it can guarantee the fair performance of public duties by public servants, restore trust in the public sector, and further, raise the status of Korea in the world as a country of integrity.”