Korea's geological survey institute under fire over mishandled overseas research funds

An audit has found that the Korea Institute of Geoscience and Mineral Resources paid a foreign joint research partner 2.17 billion won ($1.61 million) in final installments even though the partner had not completed its contracted work. Worse, 2.86 billion won in unspent research funds already disbursed to the overseas firm may never be recovered, putting taxpayer money at serious risk.

According to the results of a targeted audit by the audit committee of the National Research Council of Science and Technology (NST), released Saturday, the institute committed multiple irregularities in managing its international joint research budget, including improper payments and falsified supporting documents.

The audit committee conducted an on-site inspection from Jan. 26 to Jan. 30 and, after reviewing additional materials and interviewing those involved, finalized its findings on Sept. 29 and Oct. 1.

The most serious problems arose from an international joint research project to build an oil sands production plant in Canada.

In August 2023, the institute signed an international joint research agreement with a local Canadian firm worth about 4.78 billion won. Under the terms of the agreement, the firm was required to complete development and environmental permits, an indigenous peoples' agreement, and the purchase of drilling and production equipment before receiving the final payment.

The firm, however, failed to finalize the indigenous peoples' agreement and environmental permits, and did not complete the purchase of drilling equipment. Despite this, the institute's lead researcher and expenditure officer paid the firm the 2.17 billion won balance in July 2024 without properly verifying whether the contracted work had been fulfilled.

Particularly troubling, an earlier first-installment payment of about 1 billion won had also gone unspent at the time the final payment was made. The firm's final report contained only future plans rather than actual research results, and the invoices submitted as proof of expenditure listed tasks that had not been carried out as if they had been completed.

Ultimately, negotiations with the indigenous community broke down, and the institute failed to secure the demonstration block.

The central question now is whether the disbursed funds can be recovered. The institute has filed for international arbitration with the International Chamber of Commerce and is pursuing recovery of the 2.86 billion won in unspent funds through an asset investigation of the Canadian firm. However, the firm's financial health has deteriorated, leaving the prospect of actual recovery uncertain.

The audit committee called for heavy disciplinary action — equivalent to demotion — against the two officials responsible for managing the research funds.

The institute said it had identified the problems through its own internal review and an audit request, and that follow-up research is proceeding normally.

"Last year, we recognized the seriousness of failing to secure the demonstration block and the delay in achieving our research goals, and launched an institutional review," an institute official said. "We requested an NST audit and made every effort to implement corrective measures and establish safeguards against recurrence."

The official added that the institute had redirected its own resources to directly pursue a new block, and that a third block was secured within four months of launching the effort under a new lead researcher. "We have signed a second-phase project agreement following a first-phase evaluation by a specialized agency, and research is currently proceeding on a stable footing," the official said.