Yeongjong international school project unravels as Chinese franchise firm, not British parent, found to be funding $25M setup cost

A plan to establish an international school in Yeongjong International City's Midan City — billed as the anchor facility of the development — is careening toward collapse.

The Incheon Free Economic Zone Authority, known as IFEZA, appeared to gain momentum last March when it selected Wycombe Abbey School of the United Kingdom as the preferred negotiating partner for the Yeongjong international school project.

Since then, a string of alleged irregularities has surfaced: IFEZA is accused of extending the proposal submission deadline and relaxing document requirements during the bidding process. Those allegations have already drawn the project into litigation. Now, court testimony has exposed what critics say was hidden behind the prestigious British school's name — a Chinese private franchise operation — deepening the crisis considerably.

With IFEZA itself effectively conceding in court to critical flaws in the selection process, critics say cancellation of the preferred-partner designation is inevitable, along with disciplinary action against the officials involved and a full-scale audit.

<style ref="s0">Bombshell in court: British parent invests nothing — Chinese franchise partner foots the 38 billion won bill</style>

The extent of the problem became clear on May 22, during witness examination in a lawsuit filed by a lower-ranked applicant against IFEZA seeking to nullify the preferred-partner selection.

Shin, an IFEZA official responsible for the international school project who appeared as a witness, delivered pivotal testimony under questioning by the plaintiff's counsel.

Shin said the source of the $25 million (about 38 billion won) startup capital that Wycombe Abbey had committed to in its proposal was not the British school itself but BE Education.

The testimony made clear that Wycombe Abbey's British parent institution would contribute effectively nothing to establishing the Yeongjong branch campus.

The proposal was also found to contain a clause stating that BE Education would cover any operating losses the school might incur in the future.

BE Education, the company pledging the startup capital, is a Chinese private firm that began as a study-abroad agency in Shanghai in 2003, signed a brand licensing agreement with Wycombe Abbey in 2015, and now operates five schools in China and Hong Kong.

The project, critics say, amounts not to bringing in a British school but to hosting a franchise operation run by a Chinese private company that merely borrows the British school's name.

<style ref="s0">Potential violation of domestic law: 'They can't recoup the money — so why donate 38 billion won? Creative accounting is obvious'</style>

This structure raises serious questions about whether it directly violates or effectively circumvents current domestic law — specifically the Special Act on the Establishment and Operation of Foreign Educational Institutions and the Private School Act.

Under Korean law, foreign educational institutions may not remit surplus funds to an overseas parent school, nor transfer them to another account without going through liquidation procedures.

As with domestic private school foundations, capital contributed to establish a school is in effect irrecoverable.

A precedent underscores the risk: Dulwich College Seoul was criminally prosecuted on charges of breach of trust and embezzlement after funds were siphoned out — under the guise of franchise fees and similar payments — during the process of recovering a loan made by the British parent school.

That precedent points to a glaring contradiction in the current case. There is no plausible reason for a Chinese private company with no connection to the British parent to make a "pure donation" of 38 billion won toward establishing the Yeongjong international school, given that the money cannot be recovered under Korean law.

International school experts said BE Education's provision of startup funds, combined with its demand for operational authority and a co-representative position, constitutes a clear investment. Because domestic law blocks recovery of that investment, they said, the company would be highly likely to resort to illegal accounting manipulation or roundabout methods to siphon off surplus funds during school operations.

The concern that a public project — one involving the school site and roughly 150 billion won in taxpayer-funded construction costs — could become a playground for illicit accounting by a Chinese private firm is increasingly looking like a real possibility, critics say.

<style ref="s0">IFEZA turned a blind eye to the funding plan worth 300 points — allegations of favoritism and deliberate concealment</style>

The plaintiff argued that, given these confirmed facts, the entire process — IFEZA's initial document review and the external evaluation committee's assessment — is tainted by defects serious enough to render it void from the outset.

Article 14 of IFEZA's bidding guidelines requires applicant school corporations to present their own plan for equity capital, startup funds and operating capital needed to establish the branch campus. The item carries a weight of 300 points out of the total evaluation score, making it one of the most critical criteria.

Under the guidelines' intent, what is being evaluated is the financial capacity and accountability of the school corporation itself — not that of a third-party Chinese private company.

Wycombe Abbey's proposal, which offloaded financial responsibility and operating losses onto an outside private company rather than the parent school, should have been immediately disqualified or scored at the bottom and eliminated at the initial screening stage.

Yet after receiving the proposal in February, IFEZA passed it through despite having ample time to verify it. The external evaluation committee, which convened in March, also failed to filter out the fatal flaw — and awarded a perfect score of 300 points, ultimately designating Wycombe Abbey the preferred negotiating partner.

The plaintiff alleges that IFEZA and the evaluation committee members either committed serious dereliction of duty or deliberately concealed and overlooked the defect to favor a particular applicant — what the plaintiff calls a "cover-up."

Article 11 of the bidding guidelines requires that the appropriateness of project proposals and supporting documents be reviewed before submission to the evaluation committee. Under the process, IFEZA conducts the initial review, followed by a secondary review by external evaluators before a final decision is made.

Critics say that despite bearing responsibility for verifying the adequacy of submitted documents and funding plans between the proposal submission and the external evaluation, IFEZA failed to catch the problem and forwarded the proposal to the committee anyway.

<style ref="s0">A carbon copy of the Songdo Harrow debacle — time for a full audit of IFEZA's international school policy</style>

The Wycombe Abbey affair, critics say, is structurally identical to the controversy two years ago over Harrow School's proposed campus in Songdo International City, which collapsed entirely after a memorandum of understanding was terminated over conflicts with domestic law.

In that case, too, it was a Hong Kong agency — AISL — rather than the British parent school that took the lead, and the project ultimately could not clear the legal hurdles.

Local sentiment toward IFEZA has turned cold, given that the authority appears ready to hand over another project to a Chinese franchise company despite having gone through the same failure before.

A representative of the plaintiff said the court testimony by the IFEZA official had clearly established the illegality of the bidding process and the inadequacy of the review. The representative called for a comprehensive audit by a higher authority of IFEZA's overall international school attraction policy, saying the authority had dragged a public project involving 150 billion won in taxpayer money into a legal quagmire, while also expressing hope for a sound ruling from the court.

Over the past four years, Incheon's international school attraction efforts have been plagued by serious and systemic failures — first the Songdo Harrow project's collapse over domestic legal violations, then the controversy over how the Yeongjong school was being pursued. Yet Incheon Mayor Yoo Jeong-bok, who holds ultimate authority over international school decisions, showed no interest in addressing the problems.

As the June 3 election for the ninth-term Incheon mayor approached, Yoo suddenly began taking a hands-on role in international school administration — drawing criticism that he was building a record of achievements purely for electoral purposes.