[Edaily Marketin JI YEONG-EUI Reporter] The National Pension Service (NPS) has abruptly placed the head of its Real Estate Investment Division on administrative leave in connection with allegations of conflicts of interest and collusion within the division. On the same day, a director-level official from the Compliance Support Division—which oversees internal controls and compliance monitoring—was also placed on administrative leave. This has led to speculation both inside and outside the National Pension Service that the fund’s decision-making and overall compliance monitoring systems are under scrutiny following the failed replacement of the general partner (GP) for the “Yeoksam Centerfield” project and the conflict-of-interest controversy.

According to the investment banking (IB) industry on the 17th, the National Pension Service issued a suspension order that day against Mr. Ahn, head of the Real Estate Investment Division. It has been confirmed that this measure was carried out following approval by Kim Seong-ju, Chairman of the National Pension Service. According to an E-Daily investigation, the basis for this suspension is “Article 20, Paragraph 6 of the National Pension Service Personnel Regulations.” This provision stipulates that a staff member may be placed on administrative leave for up to six months “when it is determined that the smooth and normal performance of duties is difficult due to public or private circumstances.” Administrative leave is a personnel measure that removes an employee from their duties pending the finalization of disciplinary action, and some interpret this move as being linked to the ongoing re-audit of the Real Estate Investment Division.

In addition to the head of the Real Estate Investment Division, the head of the Compliance Support Division was also placed on administrative leave on the same day. The National Pension Service explained, “The personnel decision regarding the Compliance Support Division is a separate measure unrelated to issues involving the Fund Management Headquarters or the Real Estate Investment Division.”

However, the market is taking note of the fact that personnel actions removing the heads of both the Real Estate Investment Division and the Compliance Support Division from their duties were carried out on the same day. With the heads of the Compliance Support Division—which is responsible for internal controls—being removed from their duties at a time when controversies over conflicts of interest related to the Real Estate Investment Division are escalating, some interpret this as a sign that the Fund Management Headquarters’ decision-making and overall compliance monitoring system have come under scrutiny.

It is reported that the National Pension Service’s Audit Office is currently re-examining the process of replacing the Centerfield GP, the Real Estate Investment Division’s exercise of authority, allegations of abuse of power toward asset managers, and conflicts of interest. Previously, the National Pension Service conducted an audit into allegations of collusion involving the Real Estate Investment Division; however, amid the confusion surrounding the chairman’s replacement, the audit was concluded without any significant action, sparking controversy over a “self-audit.”

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In particular, Director Ahn is expected to face a focused review during the re-audit regarding the background behind the “forced replacement of the Centerfield GP”—a move criticized for lacking both practical benefit and justification—as well as the process for selecting Koramco Asset Management as the preferred bidder and the legal and economic appropriateness of replacing the existing asset manager. The fact that Koramco Asset Management hired a former high-ranking NPS official as the head of its Jeonju office, coinciding with the timing of the GP replacement push, has also come under scrutiny.

Yeoksam Centerfield is a prime office building in Seoul’s Gangnam district in which the National Pension Service invested with Aegis Asset Management serving as the GP. The National Pension Service’s Real Estate Investment Division pushed for a plan to replace the office’s GP from Aegis Asset Management to Koramco Asset Management, but the proposal was blocked by the Alternative Investment Committee, the final decision-making body. The legal and economic appropriateness of a structure that would pay the existing manager a large success fee and equity profits even before the actual sale of the asset took place became a point of contention. Critics pointed out that there was no reason to push for an unreasonable replacement.