‘Doseonghoe’, a retirees group of the Korea Expressway Corporation (KEC), was found to have evaded about KRW 400 million in taxes annually by distributing highway rest area operating profits to its members. Indications of preferential treatment in the bidding process for rest area and gas station operating rights were also confirmed.

On the 7th, the Ministry of Land, Infrastructure and Transport announced the results of an audit conducted since January on the KEC and Doseonghoe, stating, “It was confirmed that Doseonghoe, a nonprofit corporation, has devoted itself solely to acting as an interest group for KEC retirees.”

Established in 1984, Doseonghoe is a retirees group of the KEC, with over 2,800 retired employees as members as of the end of 2024. It operates rest areas, including the Mannamui Plaza rest area in Seoul.

According to the audit by the ministry, Doseonghoe established its subsidiary H&DE to win operating rights for highway rest areas, received a substantial portion of the profits as dividends, and paid them out to members as congratulatory and condolence money. The dividends received from 2016 to 2025 averaged KRW 887 million per year, of which about KRW 400 million was used for items such as birthday gifts, congratulatory and condolence payments, and commemorative goods.

All four executives, including the CEO of H&DE, were Doseonghoe members, and the ministry concluded that they made a ‘self-dividend’ of the profits back to Doseonghoe. It also judged that by failing to include these distributed profits in taxable income, such as corporate tax filings, about KRW 400 million was evaded each year.

The ministry stated, “This runs counter to the fundamental purpose of the nonprofit corporation system, in which profit distribution is strictly prohibited,” and “They effectively controlled the subsidiary while focusing on the for-profit business of operating rest areas.”

Signs were also found that the KEC gave preferential treatment to Doseonghoe during the process of contracting operating rights for rest areas.

Last year, the KEC carried out a pilot project under which four aging rest areas, including Seonsan Rest Area on the Jungbu Naeryuk Expressway toward Changwon, would be remodeled with private investment in exchange for 15-year operating rights, and to improve operational efficiency it pursued unification of the rest area and gas station operators.

At the time, the gas station at Seonsan Rest Area was already being operated by The Way Distribution, a subsidiary of H&DE, and H&DE had been selected as the successful bidder for the unified operating rights for the rest area and gas station.

The problem is that the KEC signed an agreement to grant The Way Distribution operating rights for another gas station to replace the one at Seonsan Rest Area. Under the KEC’s internal policy that only one affiliate within a corporate group may participate in a bid, the chain of affiliated entities ‘Doseonghoe-H&DE-The Way Distribution’ meant there was no need to compensate The Way Distribution.

The ministry determined that the KEC treated H&DE and The Way Distribution as separate companies and extended unwarranted compensation, thereby conferring preferential treatment on Doseonghoe. It also confirmed indications that information such as the status of the feasibility study, bid schedules, and price data had been leaked in advance to Doseonghoe.

It was also revealed that from December 2015 to May 2022, for six years and six months, the KEC allowed the convenience store at Munmak Rest Area on the Yeongdong Expressway toward Seochang, among other outlets, to be operated without bidding.

The ministry will demand a revision of the articles of association to bar Doseonghoe from participating in rest area operations, while referring allegations of tax evasion and misconduct related to rest area operating rights for a tax audit and investigation.

Minister Kim Yun-deok of the Ministry of Land, Infrastructure and Transport said, “These audit findings are the first step toward dismantling the cartel that has become entrenched over decades among the KEC, its retirees, and rest area operators,” adding, “We will push ahead quickly and thoroughly with reforms to the operating structure of rest facilities.”