ACRC recommended institutional improvements for improving transparency in online retail businesses of public organizations

Fairness in selecting stores, product arrangement, and quality testing must be strengthened

October 26, 2017

Anti-Corruption and Civil Rights Commission

The Republic of Korea

Inappropriate practices of retail businesses of public organizations, including selection of participating stores, product arrangement, and quality testing, are expected to be improved; for example, recruitment advertisements for stores participating at online marketplace operated by public organizations must now be run for at least one month.

The ACRC has devised plans for improving transparency in online retail businesses of public organizations and public-service related organizations, and made recommendations them to ten public organizations, including the Ministry of National Defense (MND).

The number of users of online retailers* operated by public organizations has been increasing because of convenient purchasing processes and trust in operators.

Accordingly, last June the ACRC conducted fact-finding studies for selecting participating stores as well as quality tests on those services in order to eradicate corrupt practices.

The study revealed that fairness was missing from the selection process as no review committees had been organized, and participating stores had simply been selected by internal employees.

Recruitment advertisements had also been placed without any preparation period, and applications had been received simultaneously. Examination standards were not disclosed, or arbitrary standards had been used, leading to distrust.

Also, website posting arrangement and periods for featured products were decided internally, without criteria such as popularity or sale amounts, which risked controversy over the appearance of providing special favors.

Products that had passed initial quality tests did not receive regular or frequent inspections. In the case of agricultural and marine products, no joint inspections with relevant agencies - such as the Ministry of Food and Drug Safety (MFDS) or the Animal and Plant Quarantine Agency (QIA) - were conducted.

Administrative sanctions against stores with repeated complaints, such as delays in delivery or damages, were inadequate. Satisfaction survey on follow-up management was not conducted, and information disclosure about business expense settlements was not sufficient.

Consequently, the ACRC recommended that recruitment advertisements be required to run for at least one month, external examiners be included in review committees, and objectivity be ensured in evaluation standards.

The ACRC also recommended that fairness be improved when arranging and posting products on the main page of websites, administrative sanctions on inappropriate stores be strengthened, joint inspections with relevant organizations be conducted and product quality test standards tightened, customer satisfaction survey be conducted, and business expense settlements be disclosed to enhance follow-up management.

An ACRC official said, “The latest institutional improvements will lead to improved transparency in selecting participating stores as well as increased effectiveness in quality testing, which will ultimately lead to heightened user satisfaction. The ACRC will continuously contribute to job creation across the government by improving abnormal business practices or unreasonable systems in the public sector.”