[2020 National Audit] Misuse of SME R&D Research Funds, 9.6 Billion Won Over 5 Years

Without Actual Transactions, Wages and Subsidies Obtained Through False Reporting, One-Quarter Unrecovered

Research Fund Misappropriation Status in the Last 5 Years. [Table by Office of Assemblyman Lee Seong-man]

[Asia Economy Reporter Kim Jong-hwa] It has been revealed that 9.7 billion KRW of R&D-related research funds supported through the Small and Medium Business Technology Information Promotion Agency (SMBA) over the past five years were misappropriated.

According to the 'Status of Misappropriation of SME R&D Research Funds' submitted by small and medium enterprises to Lee Seong-man, a member of the National Assembly's Industry, Trade, Energy, Small and Medium Venture Business Committee from the Democratic Party of Korea (Bupyeong Gap), as of the 8th, from 2016 to July 2020, there were 123 cases of misappropriation among the research funds supported by SMBA for R&D projects, with a total misappropriated amount confirmed at 9.78 billion KRW. Of this, 7.3 billion KRW has been recovered, leaving about one-quarter of the total misappropriated amount unrecovered.

On average, 24.6 cases of research fund misappropriation occurred annually, with a staggering 58 cases in 2018 alone. Of the 2.25 billion KRW misappropriated last year, only 1.18 billion KRW was recovered, which is just half.

Examining the patterns of research fund misappropriation, it was confirmed that funds were unjustly obtained by methods such as paying wages to personnel who did not participate in the research or falsely claiming actual transactions where none existed to receive support funds.

SMBA has been operating the 'R&D Fraud Reporting Center' since June last year to prevent fraudulent use of research funds; however, this year, 11 cases of misappropriation and 1.15 billion KRW of misappropriated funds have occurred, showing little significant results.

Accordingly, there is a growing call to conduct integrity education for R&D companies and significantly strengthen monitoring of fraudulent activities.

Assemblyman Lee Seong-man stated, "R&D is a core project to strengthen the capabilities of small and medium enterprises," adding, "Efforts to eradicate fraudulent activities are necessary, such as expanding monitoring of misappropriation and establishing an efficient recovery system to prevent the contraction of related projects."

This content was produced with the assistance of AI translation services.