Moon Administration Solar Power Project 'Corruption Maze'... Additional 582.4 Billion KRW Misconduct 'Detected'

Inspection of Corruption in Solar Power Projects with 12 Trillion Won Investment
Second Inspection Found 5,359 Cases, 582.4 Billion Won in Misconduct

False Subsidy Settlements and No-License Company Contracts
Step-by-Step Improvements... Solar Industry Policy Direction Maintained

The Office for Government Policy Coordination announced on the 3rd that it has additionally uncovered misconduct amounting to a total of 582.4 billion KRW (5,359 cases) related to the Power Industry Infrastructure Fund projects, including solar power generation, during the previous Moon Jae-in administration. When combined with the misconduct amount detected in September last year (261.6 billion KRW), the total scale of illegal and improper cases related to solar power projects reaches 844 billion KRW.

In the second round of misconduct investigations announced this time, loan fraud due to false tax invoices (489.8 billion KRW) accounted for 84% of the total (582.4 billion KRW) in terms of amount.

The Yoon Suk-yeol administration reports that although a total of 12 trillion KRW was invested in power infrastructure projects such as solar power during the five years of the Moon Jae-in government, the operation and execution monitoring of the fund were insufficient. Accordingly, following a first joint government inspection conducted until August last year, a second expanded inspection was also carried out. The second inspection took place from October last year to May this year.

This inspection uncovered numerous cases of inflating solar power project costs through fake tax invoices to obtain loans, as well as false loan cases involving mushroom farms and insect breeding facilities. There were also cases of receiving subsidies for purposes unrelated to the power plant surrounding areas, splitting small-scale contracts, and false subsidy settlements.

Additional 5,359 Cases and 582.4 Billion KRW of Misconduct Detected in Second Inspection

The Office for Government Policy Coordination’s ‘Government Joint Anti-Corruption Promotion Team’ announced that following the first inspection results released in September last year (a total of 210.8 billion KRW of misconduct detected; conducted from October 2022 to May 2023), a total of 5,359 cases of misconduct were confirmed in the second inspection as well. Of these, 40.4 billion KRW will be reclaimed, and related parties will be subject to investigation requests (626 cases) and disciplinary actions (85 cases), while institutional improvements will be pursued to prevent recurrence.

The second investigation focused intensively on financial support loan projects, support projects for areas surrounding power plants, technology development (R&D), and projects funded by the Power Industry Infrastructure Fund.

First, in the financial support projects, there were cases where construction costs were inflated through fake tax invoices to obtain loans, loans were approved even though the recipients were not eligible, or financial institutions failed to recover funds despite projects not being carried out. In fact, there were cases disguised as production facilities even though mushrooms or insects were not actually cultivated or bred. These cases totaled 3,010 incidents amounting to 489.8 billion KRW.

Massive Cases of False Subsidy Settlements and Unauthorized Small-Scale Contracts

Park Gu-yeon, First Deputy Minister of the Office for Government Policy Coordination (left), and Yoo Guk-hee, Head of the Expert On-site Inspection Team, are announcing the activity plan for the team's visit to Japan, which will be dispatched to the Fukushima Daiichi Nuclear Power Plant, at the Government Complex Seoul in Jongno-gu, Seoul on the 19th. Photo by Yoon Dong-ju doso7@

In the support projects for areas surrounding power plants, 1,791 cases involving 57.4 billion KRW of improper conduct were detected. In particular, an inspection of subsidy projects in 25 local governments revealed misconduct totaling 23.2 billion KRW (10 cases) involving the purchase of ‘blind land’ with subsidies followed by neglect, and arbitrary disposal of real estate acquired with subsidies. Cases of false settlements or violations of subsidy execution procedures were recorded at 11.5 billion KRW (173 cases). Improper contract issuance such as unauthorized small-scale contracts with unlicensed companies amounted to 17.5 billion KRW (438 cases).

Cases of small-scale contracts involving retired employees’ organizations from Korea Electric Power Corporation (KEPCO) were also uncovered. Operation of power facilities in 65 island areas was entrusted through small-scale contracts for 27 years to subsidiaries of retired employee organizations, with payments executed from the power fund. The inspection revealed 40 violations of laws, including KEPCO, the ordering agency, entrusting tasks that should be performed directly and must not be outsourced through small-scale contracts, and failing to notify the Board of Audit and Inspection.

In the power sector R&D, improper cases totaling 26.6 billion KRW (172 cases) were investigated. There were 123 cases of improper project management where project cost settlements were not reclaimed, 45 cases of improper execution such as double receipt of research funds, and 4 cases of budget waste due to poor research performance.

Government to Supplement Stepwise Supervision... Solar Industry Support Policy Direction Maintained

The government plans to improve the detected problems and prevent recurrence by promoting institutional improvements in each sector. First, the loan projects will be fundamentally reviewed, and the management and supervision system at each stage will be supplemented.

Application for projects will be adjusted to after detailed construction costs are finalized, and mushroom/insect breeding farms, which are being misused for fraudulent loans, will be excluded from loan support targets. It is also planned to make submission of consent forms for tax information mandatory when applying for or participating in financial support projects. This is to ensure that improper matters can be monitored and inspected as necessary.

Fraudulent receipt of subsidies in support projects for areas surrounding power plants will also be prevented. Management of private subsidy projects will be strengthened, and support criteria will be clarified. When village associations (agricultural cooperatives) use land or other real estate through support projects, local governments will improve procedures so that they acquire the property directly at an appropriate price through appraisal, allowing the village associations to use it.

At a briefing on the day, First Vice Minister Park Gu-yeon stated, “Considering the seriousness of the problems revealed in the execution of the Power Industry Infrastructure Fund projects during this inspection, we plan to prevent the occurrence of improper matters in advance.” However, Vice Minister Park added, “The government’s support policy direction for solar power generation projects will be maintained going forward to respond to climate change,” and “We will eradicate illegal cases to create a sound ecosystem for the power generation industry.”

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