541 Billion Won in National Subsidies Embezzled Through False Appraisals... Company CEO Arrested and Indicted

The CEO of a KOSDAQ-listed company who embezzled hundreds of billions of won in government subsidies under the pretext of a home-use smart power platform project has been brought to trial.

The Seoul Northern District Prosecutors' Office Joint Investigation Team on National Financial Crimes (Chief Min Kyung-ho) announced on the 27th that Kim Mo (61), the CEO of KOSDAQ-listed company A, was arrested and indicted on charges including fraud under the Act on the Aggravated Punishment of Specific Economic Crimes, violation of the Subsidy Act, and bid rigging. The prosecutors also sent four others involved in these crimes, including the chairman of the same company, Jo Mo (63), to trial without detention.

According to the prosecution, Kim and Jo were required to submit half of the project cost in cash as their own contribution to apply for the government subsidy project, but they exploited the provision allowing equipment used instead of cash to be submitted as in-kind contributions. While applying for the home-use smart power platform project, they submitted a false appraisal report claiming that the company’s software, worth only up to 300 million won, was valued at approximately 100 billion won as proof of their own contribution, thereby embezzling 54.1 billion won in subsidies.

The home-use smart power platform project is a government subsidy project that installs meters in aging apartments and replaces electric meters with smart meters. From 2020 to 2022, the project aimed to install smart meters, an Advanced Metering Infrastructure (AMI), in about 5 million multi-family housing units. Operated by the Ministry of Trade, Industry and Energy using funds from the Electricity Industry Infrastructure Fund, this project supports half of the total project cost with government subsidies, while the other half is borne by private businesses.

In June 2021, Kim and Jo contacted several appraisal companies and signed a contract with B (62), who agreed to issue appraisal reports for the desired amounts. B, who issued the false appraisal reports, was also indicted without detention.

They are also charged with misappropriating the subsidies to obstruct competitive bidding. They prearranged for company C, which agreed in advance to use the subsidies as directed by company A, to be the supplier, and created a fund circulation structure in which payments were made to a subsidiary of company A under the pretext of raw material purchase costs.

As a result, government subsidies that should have been executed for companies selected through competitive bidding flowed to the prearranged company C, and the remaining amount, excluding company C’s share, was paid to company A.

The prosecution stated, “We will cooperate with the relevant government departments and victim institutions to recover as much of the subsidies as possible,” and added, “We will strictly investigate financial corruption offenders who waste national finances.”

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