Government Subsidies: "Money Without an Owner?"... Embezzled Through Phantom Employees and Gifted a Horse to Granddaughter

Board of Audit and Inspection Requests Investigation into 73 Members of 10 Nonprofit Private Organizations for Embezzlement, Fraud, and Violations of the Subsidy Act

The Board of Audit and Inspection confirmed organized embezzlement and other fraudulent activities by 10 nonprofit private organizations and referred 73 individuals, including the heads of these organizations, to the police on charges of embezzlement, fraud, and violations of the Subsidy Act. It was revealed that they embezzled government subsidies by siphoning off personnel expenses under the names of family members, acquaintances, or former employees, or by placing orders with fictitious companies.

Earlier, the Board of Audit and Inspection conducted an audit on the government's support for nonprofit private organizations starting from August last year. Triggered by allegations of misuse of government subsidies by the Justice and Memory Foundation (Jeonguiyeondae), led by independent lawmaker Yoon Mi-hyang, investigations were also carried out on eight government agencies including the Ministry of the Interior and Safety, Ministry of Unification, Ministry of Foreign Affairs, Ministry of Culture, Sports and Tourism, Ministry of Environment, and Ministry of Gender Equality and Family.

[Image source=Yonhap News]

As a result of the investigation, a private organization that received subsidies from the Ministry of Culture, Sports and Tourism and the Ministry of National Defense between 2017 and 2021 was found to have had its head and accounting clerk collude to embezzle a total of approximately 1.053 billion KRW. The actual head of this organization registered acquaintances of the accounting clerk as instructors and paid instructor fees over 400 times, then embezzled about 130 million KRW by receiving the money back through family members and others. Notably, this head used 485 million KRW of the embezzled subsidies for operating expenses of a company run by their child, purchasing a horse for their granddaughter's equestrian activities, supporting study abroad expenses, providing funds for their child's home purchase, and for golf and condo usage.

A part-time head of a women's rights-related subsidy organization falsely issued work confirmation documents despite traveling abroad. In this process, they fraudulently received 6.65 million KRW. Additionally, the head and accounting officer of a subsidy organization for flora and fauna conservation embezzled about 366 million KRW by receiving subsidies for fictitious personnel expenses for retired employees and others.

Embezzlement was also uncovered in a civic organization participating in Ansan City's "Community Recovery through Support for Sewol Ferry Victims" project. The head of a civic organization placed production orders with a printing company operated by their spouse and embezzled about 2.7 million KRW. Other cases of embezzlement through fictitious contracts between operating companies and family members were also confirmed. The head of a youth protection-related organization colluded with a director to falsely place service contracts with a company they operated, embezzling about 162 million KRW, and the head of a subsidy organization cooperating with overseas Koreans embezzled about 12 million KRW by establishing a paper company under their daughter's name.

The Board of Audit and Inspection stated, "This audit was conducted to sound an alarm against the perception of government subsidies as 'blind money,'" and added, "The audit results will be finalized after a resolution by the Audit Committee."

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