Strengthened Crackdown and Penalties for Fraudulent Local Subsidy Claims... Increased Rewards for Whistleblowers

On-site and Special Joint Inspections to Continue Through Year-End

Establishment of "Local Subsidy Fraudulent Receipt Inspection Team"

Increased Additional Penalties for Fraudulent Recipients

The Ministry of the Interior and Safety announced on April 19 that it has established the "Measures to Strengthen the Management of Fraudulent Receipt of Local Subsidies" and will conduct a comprehensive inspection for fraudulent claims by the end of the year.

Minjae Kim, Vice Minister of the Ministry of the Interior and Safety.

The main elements of these measures include: ▲ a comprehensive inspection of fraudulent receipt of local subsidies ▲ establishment of a monitoring system for fraudulent receipt of local subsidies at both central and local government levels ▲ expansion of the reporting platform for fraudulent claims ▲ and an increase in rewards for whistleblowers and additional penalties.

The Ministry of the Interior and Safety and local governments will conduct both on-site inspections and special joint inspections throughout the first and second halves of the year, from this month through December.

From April 20 to June 20, local governments will focus their first-half inspections on more than 6,000 subsidized projects, including those flagged for suspected fraudulent claims by the integrated local subsidy management system "Botam-e" and projects whose final accounting has not been completed in the past three years.

In addition, authorities will check whether follow-up measures, such as imposing additional penalties on individuals detected as fraudulent recipients over the past five years, have been properly enforced.

The Ministry of the Interior and Safety will also separately identify "high-risk projects" that show multiple types of suspected fraudulent receipt or involve large potential amounts, and conduct special joint inspections of these projects together with local governments.

The Ministry and each of the 17 metropolitan and provincial governments will establish dedicated inspection teams. The Ministry of the Interior and Safety will set up a "Local Subsidy Fraudulent Receipt Inspection Team" headed by the Director of Local Finance. Each metropolitan and provincial government will form a team led by its policy planning chief to conduct thorough investigations into the execution of all local subsidy projects. Biannual meetings, chaired by the Vice Minister of the Ministry of the Interior and Safety and attended by deputy heads of local governments, will be held to discuss measures to eradicate fraudulent subsidy claims and review management status.

Legal and institutional measures will also be improved to encourage active monitoring by local residents and strengthen penalties for fraudulent recipients. Starting in June, telephone reports will be accepted through the "Botam-e Call Center," and every local government website will feature an online reporting center for fraudulent claims.

The whistleblower reward will be expanded from the previous 30% of the fraudulent return order amount to 30% of all actual amounts recovered, including additional penalties. For example, if a report leads to a local government reclaiming 1 million won as the return order amount and 5 million won as additional penalties from a subsidized project operator, the whistleblower reward will increase from 300,000 won to 1.8 million won.

Financial penalties on fraudulent recipients will also be toughened. The additional penalty will be increased from up to five times, to up to eight times, the amount of the return order. A Local Subsidy Fraudulent Receipt Review Committee will be established to expedite administrative actions such as confirmation of fraudulent receipt, subsidy cancellation, and return orders.

Minjae Kim, Vice Minister of the Ministry of the Interior and Safety, stated, "We will thoroughly uncover fraudulent claims to ensure that valuable local subsidies, funded by residents' taxes, are used efficiently where they are truly needed, and we will take strict action against those who commit fraud."

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