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Press Release
Fraudulent claim of public finance subject to financial penalty up to 5 times
- Date2015-06-09
- Hit3,174
A Bill on the Prevention of False Claims of Public Funds, which aims to prevent any leak in public finance caused by false or excessive claims and improper use, passed the cabinet meeting on June 9th.
Along with an increase in government expenditure, leaks in public finance have reached a serious level because of persistent false claims in almost all areas, including various grants, welfare subsidies, R&D funds, and compensation.
Nevertheless, sanctions against malicious, habitual false claims have been limited to a mere recovery of those falsely claimed assets, while some laws do not even provide for the recovery of such assets.
Accordingly, the ACRC decided to promote the enactment of a general law on the assumption that measures based on separate laws would not be efficient to tackle false claims in diverse areas.
The Bill prohibits false or excessive claims and improper use of subsidies, compensation, and contributions provided by public organizations, which are obliged to recover illegitimate benefits from false claims.
Fraudulent claimants may face financial penalties up to five times the value of false claims, while self-reporting or false claims made by mistake or negligence may result in a reduction of penalties.
Also, to ensure effectiveness of sanctions against habitual false claimants and fraudulent claimants who claim a large sum of money, the Bill stipulates public disclosure of a list of false claimants who have received financial penalties at least twice in three years, and whose illegitimate benefits amount to KRW 30 million or over.
Furthermore, the Bill includes strong measures to protect whistleblowers such as a guarantee of employment and physical protection, in order to uncover illegal claims that are plotted secretly and systematically. Those who report false claims may receive financial rewards up to 2 billion won.
The ACRC said, "The Bill on the Prevention of False Claims of Public Funds is a comprehensive and systematic approach to control false claims and recover damage to public finances incurred by false claims. The enactment of the Bill is expected to contribute to enhancing soundness and transparency in the management of public funds."
Along with an increase in government expenditure, leaks in public finance have reached a serious level because of persistent false claims in almost all areas, including various grants, welfare subsidies, R&D funds, and compensation.
Nevertheless, sanctions against malicious, habitual false claims have been limited to a mere recovery of those falsely claimed assets, while some laws do not even provide for the recovery of such assets.
Accordingly, the ACRC decided to promote the enactment of a general law on the assumption that measures based on separate laws would not be efficient to tackle false claims in diverse areas.
The Bill prohibits false or excessive claims and improper use of subsidies, compensation, and contributions provided by public organizations, which are obliged to recover illegitimate benefits from false claims.
Fraudulent claimants may face financial penalties up to five times the value of false claims, while self-reporting or false claims made by mistake or negligence may result in a reduction of penalties.
Also, to ensure effectiveness of sanctions against habitual false claimants and fraudulent claimants who claim a large sum of money, the Bill stipulates public disclosure of a list of false claimants who have received financial penalties at least twice in three years, and whose illegitimate benefits amount to KRW 30 million or over.
Furthermore, the Bill includes strong measures to protect whistleblowers such as a guarantee of employment and physical protection, in order to uncover illegal claims that are plotted secretly and systematically. Those who report false claims may receive financial rewards up to 2 billion won.
The ACRC said, "The Bill on the Prevention of False Claims of Public Funds is a comprehensive and systematic approach to control false claims and recover damage to public finances incurred by false claims. The enactment of the Bill is expected to contribute to enhancing soundness and transparency in the management of public funds."
