[Edaily Marketin JI YEONG-EUI Reporter] The Ministry of Health and Welfare has announced its intention to conduct a thorough investigation and exercise strict oversight regarding allegations of interference in the personnel appointments of outsourced asset managers, conflicts of interest, and poor investment decisions surrounding the Real Estate Investment Division of the National Pension Service’s Fund Management Headquarters, an affiliate of the ministry. Civil society groups are also calling for a full investigation by law enforcement agencies—beyond an internal audit—and attention is focused on whether this incident will lead to structural reforms within the Fund Management Headquarters.

On the 27th, in response to a request for comment from Edaily, the Ministry of Health and Welfare stated, “We take the series of issues related to the National Pension Service’s Real Estate Investment Division very seriously,” adding, “We will exercise oversight to ensure a thorough and impartial investigation.”

The National Pension Service also explained, “The Service’s Audit Office is conducting a rigorous and fair investigation in accordance with the law and established principles.” It is understood that the National Pension Service recently placed the head of the Real Estate Investment Division on administrative leave and is currently conducting an audit into all related allegations, including interference in asset manager personnel decisions, conflicts of interest, and the appropriateness of investment decisions.

The Real Estate Investment Division of the National Pension Service’s Fund Management Headquarters has long faced allegations that it used its authority to make large-scale fund investments as leverage to pressure asset management firms into replacing or dismissing their CEOs and executives, or to demand the hiring of specific individuals. There have also been repeated complaints from affected parties that those who refused to comply were subjected to “bans on entering the National Pension Service premises,” as well as verbal abuse and personal attacks.

Allegations of personal conflicts of interest with specific asset management firms and the undermining of investment procedures are also key focuses of the audit. The National Pension Service (NPS) had pursued a plan to replace its existing asset manager at Centerfield in Yeoksam-dong, Seoul—Aegis Asset Management—with Koramco Asset Management. However, the proposal was rejected by the Alternative Investment Committee due to a conflict of interest controversy stemming from the re-employment of a former high-ranking NPS official at Koramco, as well as concerns raised regarding its legal and economic soundness. Regarding the investment process for the domestic development project “The Exchange Seoul,” the background behind the National Pension Service effectively shouldering the majority of the equity investment despite internal risk warnings, as well as allegations of personnel favoritism linked to this, are expected to be major points of contention.

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The industry is watching closely to see whether this audit will lead to the identification of actual accountability. A high-ranking official in the National Pension Service’s Real Estate Investment Division was audited last year over similar allegations of misconduct, but the case was closed with no charges filed as it coincided with a change in the NPS chairperson. Critics point out that despite years of whistleblower reports and warnings, the NPS’s internal audit system and the Ministry of Health and Welfare’s supervisory functions failed to function properly.

Civil society groups are demanding measures more stringent than an internal audit by the Fund. The National Action for Strengthening Public Pensions (Pension Action)—comprising some 300 organizations, including the Korean Confederation of Trade Unions (KCTU), the Federation of Korean Trade Unions (FKTU), and People’s Solidarity for Participatory Democracy—issued a statement on the 24th characterizing the incident not as a failure of an individual but as a structural failure of internal controls within the Fund Management Headquarters.

The Pension Action stated, “If the matter is simply resolved by disciplining or holding individuals accountable in a ‘scapegoating’ manner within the Fund, a second or third incident could recur,” and urged: △ improvements to the Fund Management Headquarters’ internal control system; △ disclosure of criteria for selecting outsourced asset managers and the prevention of undue pressure; and △ a full investigation by law enforcement agencies and protection for whistleblowers.

Given that the competent ministry has officially announced its policy of thorough investigation, management, and supervision, there is a growing consensus that the scope of the audit must extend beyond verifying the facts of individual whistleblower reports to include the decision-making system and exercise of authority within the Real Estate Investment Division, the handling of past whistleblower reports and tips, and the adequacy of previous audits.

It remains to be seen whether the National Pension Service and the Ministry of Health and Welfare will initiate external procedures, such as requesting a criminal investigation, if violations of the law or criminal allegations are confirmed during the audit. Given that civil society organizations have already demanded a full investigation by law enforcement agencies, critics point out that concluding the matter solely through an internal audit and disciplinary actions could reignite controversy over a “scapegoating” approach.