South Korea's HUG approves billions in risky PF guarantees after audit finds flaws

A parliamentary audit of the Housing and Urban Guarantee Corporation (HUG) revealed that the agency improperly approved project‑finance (PF) guarantees for three developments worth a total of 3.82 trillion won that should have been rejected. The audit also found that HUG under‑collected guarantee fees, missing 27.7 billion won on corporate lease guarantees and 1.64 billion won on two other projects. Inspectors cited 20 violations, ordered additional fee collection, and instructed HUG to tighten PF guarantee reviews and prevent acceptance of unauthenticated cash‑flow data.

The audit highlighted HUG’s deteriorating finances, with operating losses rising from 242.9 billion won in 2022 to 2.1924 trillion won in 2024, and noted lapses in lease‑guarantee renewals and refunds for overlapping lease and jeonse guarantees.