Strengthening Sanctions on Local Government Subsidy Fraud ... 2023 Integrated Computer Network Operation

"Local Government Subsidy Management Act Passed by National Assembly on the 9th"

[Asia Economy Reporter Jo In-kyung] The Ministry of the Interior and Safety announced that the "Act on the Management of Local Government Subsidies (Local Subsidy Management Act)" for transparent and efficient management of local government subsidies passed the National Assembly plenary session on the 9th.

The Local Subsidy Management Act is a law that regulates all matters related to the management of subsidies paid by local governments to corporations, organizations, or individuals. Until now, only general matters were stipulated in the Local Finance Act, and most management regulations were delegated to ordinances. The new law stipulates budget formulation, grant procedures, and management of local subsidies by law, enabling more systematic and unified management.

The new bill requires local subsidy projects with a total subsidy amount of 300 million KRW or more to have their performance reports verified by an auditor to prevent fraudulent receipt of local subsidies in advance. Additionally, local subsidy projects that receive 1 billion KRW or more in subsidies during the fiscal year are mandated to undergo external accounting audits.

Sanctions and penalties for fraudulent receipt of local subsidies have been significantly strengthened to the level of national subsidies. Previously, local government heads could only recover the subsidy or restrict its grant to fraudulent recipients, but going forward, they may exclude such recipients from performing local subsidy projects or restrict subsidy payments.

Furthermore, a penalty surcharge of up to five times the total amount of local subsidies to be returned by fraudulent recipients will be imposed and collected to enhance the effectiveness of return orders. Penalties for each type of fraud have also been strengthened to the same level as national subsidies. For example, those who receive or grant local subsidies by false or fraudulent means were previously subject to imprisonment of up to 5 years or fines up to 30 million KRW, but will now face imprisonment of up to 10 years or fines up to 100 million KRW.

In addition, the names of fraudulent recipients, violations, and disposition details will be publicly disclosed on the internet homepage.

The Ministry of the Interior and Safety and local governments have also established a legal basis for jointly building an integrated local subsidy management network. The integrated local subsidy electronic system is a system that digitizes and informatizes the entire process of local subsidy budgeting, public offering, granting, execution, and settlement to ensure subsidies are efficiently used by those who truly need them.

As part of the next-generation local finance management system, the integrated local subsidy electronic system is expected to be launched in January 2023, greatly enhancing public convenience and transparency in the use of local subsidies.

The Ministry of the Interior and Safety stated, "by early June next year, when the law is enforced, we will prepare subordinate laws such as enforcement decrees for system operation, and continuously identify and improve institutional shortcomings to eradicate fraudulent receipt of local subsidies and enhance the transparency of local finances."

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