Seoul Red Cross Hospital employees pocketed about 166.76 million won in illicit referral fees from a funeral services company; Geochang Red Cross Hospital staff collected kickbacks on memorial photos, meal deliveries and falsified embalming records
Employees at funeral halls run by hospitals under the Korean Red Cross have been caught steering bereaved families toward specific funeral service and supply vendors in exchange for secret payments totaling hundreds of millions of won.
The findings emerged Wednesday when Rep. Heo Jong-sik of the Democratic Party of Korea, a member of the National Assembly's Health and Welfare Committee, released documents obtained from the Korean Red Cross. The materials showed that funeral halls at Seoul Red Cross Hospital and Geochang Red Cross Hospital had engaged in systematic illegal kickback schemes targeting grieving families.
At Seoul Red Cross Hospital — the largest of the facilities involved — five employees, including an administrative assistant identified as A and four funeral directors, began in August 2022 referring families who had not pre-enrolled in a funeral services plan to a specific company in exchange for cash.
The group operated a structured kickback-sharing arrangement: for each referral, the funeral services company paid 800,000 won, of which A kept 350,000 won while three funeral directors split the remaining 450,000 won equally at 150,000 won each. When individual referral fees, unauthorized external embalming charges and amounts wired directly to vendors were all tallied, the total reached 166.76 million won ($123,000).
When an internal audit began, the employees attempted to conceal the payments by disguising them as "external embalming labor costs," according to the Korean Red Cross.
The Korean Red Cross dismissed all five employees in June, and police are currently investigating the case.
Similar misconduct was also uncovered at Geochang Red Cross Hospital, a regional public hospital.
Two funeral directors at Geochang Red Cross Hospital, identified as B and C, were found to have continuously accepted kickbacks from a memorial photo printing company and a dosirak delivery company since 2022, splitting the proceeds evenly between them.
For each memorial photo printed, the pair collected 40,000 won — half of the 80,000 won fee charged to families — pocketing a total of 280,000 won across seven transactions. They also referred families to a dosirak company in Daegu, receiving 20 percent of each delivery order as a referral fee, and collected 1 million won ($739) in cash along with 200,000 won in holiday fuel vouchers across 10 transactions.
The two also falsified records on weekends and holidays to make it appear that outside funeral directors had performed embalming services, fraudulently collecting 2.3 million won in fabricated embalming fees across 23 instances. B separately received 500,000 won for providing labor directly to an outside vendor. The Korean Red Cross dismissed B and fired C in April last year.
The Korean Red Cross has drawn criticism for failing to inspect other hospital funeral halls after uncovering the misconduct at Geochang, allowing the problem to fester.
"This is a shameless crime — exploiting families at their most vulnerable moment, when they have just lost a loved one, to funnel them toward a specific funeral company and pocket the proceeds," Heo said. "The police investigation must bring the illegal conduct at Seoul Red Cross Hospital fully to light, and those responsible must be severely punished."
Heo added that the Korean Red Cross should immediately conduct a comprehensive audit of all funeral halls under its umbrella — not just those already caught — and draw up a reform plan to ensure transparent operations.
thlee@heraldcorp.com
