This Year, 5 Accounting Fraud Reports Resulted in 200 Million Won in Rewards Paid

FSS: "Internal Whistleblowers Are Crucial to Strictly Punish Illegal Activities"

The Financial Supervisory Service announced on the 25th that a total of 213.4 million KRW in rewards has been paid this year for five reports that contributed to the detection of accounting fraud.

The annual status of reward payments for accounting fraud reports is as follows: 1 case and 3.3 million KRW in 2018; △ 2 cases and 119.4 million KRW in 2019; △ 4.84 million KRW in December 2020; △ 5 cases and 228.6 million KRW in 2021; △ 2 cases and 56.5 million KRW in 2022; △ 5 cases and 213.4 million KRW up to September 2023.

The amount paid over the first nine months of this year increased by 278% compared to the previous year. It is expected that the reward payments will further increase during the remaining three months. Based on accounting fraud reports, companies subject to accounting reviews and audits from 2017 to 2022 totaled 25 cases; among them, actions have been completed for 23 companies, and the remaining 2 companies are currently undergoing review or audit.

The Securities and Futures Commission judged that most of the companies' illegal acts were 'intentional,' and took strict measures such as prosecutorial referral, notification, and imposition of fines.

An official from the Financial Supervisory Service emphasized, "Just as the full extent of the accounting fraud in the globally notorious WorldCom and Enron cases was revealed by internal whistleblowers, the role of internal whistleblowers is paramount in strictly cracking down on illegal activities."

Meanwhile, according to the revised related regulations enacted in May, rewards are also being paid to whistleblowers of two cases that received minor disciplinary actions (warnings or cautions). Additionally, rewards are paid to anonymous reports if the whistleblower's identity is verified after the action is confirmed.

The maximum reward payment amount has also been doubled from 1 billion KRW to 2 billion KRW through legal amendments. Furthermore, a basis has been established to exempt or reduce penalties if the whistleblower was involved in accounting fraud under the direction of the CEO or others, provided certain conditions are met.

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