"Nearly 1,000 Cases of 'Embezzling Public Funds'... Inflated Workdays and Staff Numbers"

14% Increase in Subsidy Management Act Violations Last Year
Most Punishments Limited to Suspended Sentences
"Government and Police Enforcement Limits... Utilize Internal Whistleblowing, etc."

[Asia Economy Reporter Jang Se-hee] It has been confirmed that nearly 1,000 recipients fraudulently received government subsidies last year. They committed the crime by inflating the number of working days and staff members in their reports.

According to the 'Government Subsidy Fraud Crackdown Status' obtained by Asia Economy from the National Police Agency on the 17th, 972 people were referred to the prosecution last year on charges of violating the Subsidy Management Act. This is a 14% increase compared to 849 people in 2021. As the amount of government subsidies increased significantly, cases of fraudulent receipt also rose. Government subsidies increased by 52.9% over the past five years, from 66.9 trillion won in 2018 to 102.3 trillion won this year. The number of arrests increased from 322 to 482 during the same period. However, the number of people detained decreased from 10 to 1.

A police official stated, "Although the number has decreased somewhat compared to before COVID-19, it still remains at a high level," adding, "Investigations usually begin only when requested by public institutions, so there are limits to actively cracking down." The number of people sent to the prosecution was 3,309 in 2019 and 223 in 2020.

◆ Inflating Working Days and Staff Numbers to Pocket Taxes = On December 20 last year, the Songpa Police Station in Seoul referred Lee, the head of a nursing care center in Seoul, to the prosecution without detention on charges of fraud and violating the Subsidy Management Act.

Lee is accused of embezzling about 100 million won by increasing the number of service days provided to the elderly or registering more nursing care workers with the National Health Insurance Service. The Health Insurance Service discovered this and requested a police investigation. Lee reportedly admitted to the charges during the police investigation. A police official said, "After reviewing the statements, we judged there was sufficient evidence and recently referred the case without detention."

The Anti-Corruption and Economic Crime Investigation Unit of the Gwangju Police Agency referred four people to the prosecution without detention last September on charges of misappropriating the budget for a survival swimming class project. They are accused of either not conducting the classes or reducing them during the operation of the survival swimming class, which received a subsidy of 50 million won in 2019, thereby misusing the funds.

◆ Punishments Are 'Suspended Sentences'... Utilizing Internal Whistleblowing and Reporting = Although cases of fraudulent receipt of taxes occur frequently, punishments mostly result in suspended sentences. Payment of fines and other factors are taken into consideration.

In August last year, the Ulsan District Court Criminal Division 8 sentenced A, who was tried for violating the Subsidy Management Act, to six months in prison with a one-year suspended sentence. A had fraudulently received about 23 million won in employment retention support funds over five occasions but was given leniency because all fines were paid.

The Daegu District Court Criminal Division 10 also sentenced daycare center directors B (59) and C (58) to one year in prison with a two-year suspended sentence for fraudulently receiving subsidies. They were tried for fraudulently receiving a total of 180 million won but the court considered that the subsidies were used for daycare center operations.

Experts advise that since fraudulent receipt of government subsidies can disrupt economic order, it is necessary to actively utilize internal reporting systems to catch offenders.

Professor Kim Do-woo of the Department of Police Science at Gyeongnam National University pointed out, "There is a lack of guilt with the mindset that paying fines is enough if caught," adding, "Even in full investigations, the process is limited to submitting related documents rather than conducting face-to-face visits." He emphasized, "Since there are physical limits to crackdowns by the government and police, it is necessary to activate internal whistleblowing and reporting systems."

Professor Lee Woong-hyuk of the Department of Police Science at Konkuk University stressed, "As welfare policies increase, there are people who try to exploit them," and added, "It is necessary to adjust the level of punishment to a degree that raises awareness."

Meanwhile, the government has decided to strengthen inspections to detect fraudulent receipt of government subsidies. The Ministry of Economy and Finance plans to advance its system to improve detection accuracy and is pushing for legal amendments to require accounting audits for those who receive government subsidies of 300 million won or more.

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