'Inflating Participant Numbers and Improper Use of Memorial Park Visit Funds'... Presidential Office Says "Local Government Private Subsidies May Also Be Large" (Comprehensive)

-President's Office Announces 'Status and Future Plans for Private Organization Subsidies'
-Comprehensive Survey of Private Organization Subsidies to be Conducted and Handled According to Audit Results
-Regulations Including Accounting Exemption Clauses to be Revised... Strengthening 'Management System'

[Image source=Yonhap News]

[Asia Economy Reporter Baek Kyunghwan] The Presidential Office released the results of a fact-finding survey and future improvement measures on the 28th, just one day after President Yoon Seok-yeol ordered a "complete overhaul of the national subsidy management system." This move comes amid ongoing cases of accounting fraud and misuse of funds by these organizations. Accordingly, the government plans to conduct a comprehensive survey of subsidies to private organizations and significantly improve the management system by suspending support based on audit results. The plan includes reviewing not only the accounting and usage processes of the organizations but also the necessity of support and all related procedures, as well as revising exemption clauses for accounting audits to strengthen subsidy management.

According to the fact-finding survey results disclosed by the Presidential Office on the day, government subsidies paid to private organizations during the previous administration amounted to 4.6 trillion won annually. In 2021, just before former President Moon's departure, the amount exceeded 5 trillion won for the first time, with the support scale increasing by 400 billion won each year. The annual amounts were ▲ 3.5571 trillion won in 2016 ▲ 3.7325 trillion won in 2017 ▲ 4.0367 trillion won in 2018 ▲ 4.5067 trillion won in 2019 ▲ 4.8543 trillion won in 2020 ▲ 5.3347 trillion won in 2021 ▲ and 5.4446 trillion won. Considering that the Moon Jae-in administration governed for about half of 2017 and 2022, the average annual support was approximately 4.6515 trillion won.

As of this year, out of the total support amount of 5.45 trillion won, 1.45 trillion won was directly subsidized by ministries to organizations, and 4 trillion won (2 trillion won from the government and 2 trillion won from local governments) was provided to private organizations as matching funds by central ministries and local governments. The Presidential Office also expects that local governments have independently supported private subsidy projects separately. A Presidential Office official added, "Although not included in this survey, the scale is also estimated to be considerable."

Problems were also clearly revealed. For example, in the Youth Counseling Support project, inflated participant numbers led to excessive wage claims and false service fee payments, resulting in the recovery of 890 million won out of a total support of 4.8 billion won. The Sewol Ferry disaster support project, jointly funded with 11 billion won over six years by the Ministry of the Interior and Safety, Gyeonggi Province, and Ansan City, was misused for activities unrelated to its purpose, such as studying the New Year's address of the North Korean Supreme Leader, seminars on Kim Il-sung's anti-Japanese struggle, and family pension trips unrelated to victims.

There was also a case where subsidies were received for a memorial project to visit the National Cemetery for independence activists, but after inviting politicians, a pro-Japanese collaborator tomb removal performance unrelated to the project plan was conducted, leading to the full recovery of the subsidy. Additionally, a group whose representative publicly declared on social media that they "pursue communism" and are anti-American and pro-Russian received subsidies by participating in a "family communication project."

However, since 2016, a total of 153 problematic projects have been detected across ministries, with recovered amounts totaling 3.4 billion won, averaging only about 20 million won per case. The Presidential Office judged that the number of detected cases is minimal compared to the total projects, and various issues not detected by ministries have been revealed through media or National Assembly audits, indicating the need for improvement in managing subsidies to private organizations.

Accordingly, the government has decided to conduct a comprehensive internal audit of subsidy execution status by the first half of next year. The audit will focus on the selection process of supported organizations, transparent accounting, and whether subsidies were used appropriately for their intended purposes. Projects found to have significant problems will be decisively restructured based on audit results.

The deficient management system will also be revised. Nearly 60% of subsidy projects are "local government subsidy projects," where local governments take full responsibility for management despite partial funding from ministries, making it difficult for ministries to know which executing agencies are selected and how funds are spent. To improve this, local government subsidy projects will be placed under the responsibility of ministries going forward.

The lax management regulations under the Subsidy Act will also be supplemented. Currently, the Subsidy Act exempts accounting audits for projects under 1 billion won and external verification of settlement reports for projects under 300 million won. Additionally, mid-term inspections and on-site investigations are discretionary rather than mandatory. The government plans to strengthen project management by revising these loose regulations.

Furthermore, the online subsidy management system will be revamped to thoroughly manage subsidies online and transparently disclose results. A Presidential Office official stated, "These internal audits, project restructuring, management system, and system improvements will be completed by the first half of next year and reflected in the 2024 budget formulation to contribute to budget efficiency and transparency enhancement."

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