Three-tiered monitoring and verification system of fraudulent government subsidy receipt will be built

January 11, 2018

Anti-Corruption and Civil Rights Commission

The Republic of Korea

The Korean government announced its finalized measure to end illicit receipt of government subsidies at the 26th State Affair Meeting presided by Prime Minister Lee Nak-yeon.

The measure aims to remove loopholes in monitoring system of government subsidy receipt through a three-tiered system, where status of government subsidy execution is conducted by electronic system, public agencies and citizens.

◇ Verification through electronic system - auto of suspicious receipt

First, more public official data will be linked to the government subsidy management system for its better use.

The current government subsidy management system is linked to 360 public officials data management systems including Supreme Court’s family relations status system. However, some unusaual financial transaction data such as car insurance, donation collection approval, and exobitant amount of money in bank account is not linked to the system.

So, the government decided to add 12 such public official data to the government comprehensive subsidy management system and mandate each Ministry to disclose illegal subsidy receipt data. The government comprehensive subsidy management system will be used to strengthen verification of each stage of beneficiary selection, subsidy execution and follow-up measure.

In particular, for stronger subsidy verification, 50 schemes to detect illicit receipt will get more sophisticated, and through an auto system, upon detected, any suspicious receipt of subsidies will be notified to the concerned Ministry. Moreover, a change in data requried for the entitlement of government subsidies, such as income change or death, will be automagically ed. Government-subsidized project of more than 10 million won will be also made public.

◇ Monitoring and Inspection by public agencies- punishing violaters to discourage others from violation

The government will build a regular monitoring system by launching Illicit Government Subsidy Management Task Force, which provides support to the Finance and Strategy Ministry’s Subsidy Management Committee. A guideline on handling fraudulent subsidy receipt will be developed for an uniformed standard for the classification of illicit receipts, which is now different from agencies to agencies

In addition, Subsidized Project Assessment Team, which is now set up at the discretion of the 36 subjected institutions, will become mandatory to be launched. To encourage 17 cities and provinces to create a body dedicated to handling illegal subsidy receipt, standard labor cost of local governments will be raised.

The prosecutor’s office and the police will uncover “hidden irregularities” in government subsidies while the ACRC will refer reports of fraudulent subsidy receipt to investigative and inspection agencies and provide analysis data of such reports

Prime Minister’s Corruption Prevention Monitoring Team will select a random sample subject to monitoring in the four area of frequent corruption without a notice and in collaboration with the relevant agencies: ▲health and welfare, ▲agriculture, fishery and forest, ▲employment and labor, ▲education and environment

The government stated that with an aim to prevent illicit receipt of public money, those who illegally receive government subsidies as well as the official in charge will face a strong punishment to prevent further illicit receipts

The current subsidy law’s “one-strike-out” provision excludes fraudulent recipients of public fund from future related projects upon the detection of the fraudulent receipt. The current law also has a provision stating that the violater should return the illegally received money and pay surcharges of up to five times the received amount. Lists of violators should be disclosed on the website of the concerned agency.

At the start of each year, Subsidy Management Committee will report management data by ministries to the State Council, which then will be reflected in the assessment of each government agency and evaluation for the extension of subsidized projects. The Committee will also develop a standard for rewards to reporters of illegal receipt for each Ministry and consider an increase in monetary awards.

Local governments will reflect subsidy management data by cities and provinces in local government agency assessment and include status of subsidy management in the audit criteria, enabling subsidy management status monitoring at any time.

◇ Monitoring by citizens…using community network

The government will give a full explanation to a resident committee and resident budget committee on subsidized projects subject to the residents and major cases of fraudulent receipt and ways to report violation and promote voluntary prevention and report.

This will not only uncover hidden fraudulent receipts but also those entitled to subsidies who have not been received the benefits

Moreover, Citizen Audit Team(246), currently operated by Local Government Budget Wast Report Center of Ministry of the Interior and Safety, will be operated in 17 cities and provinces with 40 to 100 citizen auditors.