Gov’t to crack down on falsely-claimed subsidies

The government announced that it will strengthen punishment on individuals and businesses abusing its subsidy programs.

The Ministry of Economy and Finance announced Tuesday that it will make legal amendments to file immediate complaints against individuals and businesses that wrongfully receive government subsidies.

The government effort aims at discouraging false claims for support through its subsidy program, which covers a vast combined budget of 124 trillion won ($103.8 billion) this year between the central and regional governments.

Under current laws, wrongful collection of government subsidies can result in fines of up to 100 million won or up to a 10-year sentence.

It will also encourage individuals to report wrongful subsidy collection by replacing the current reward cap of 200 million won with awards of up to 30 percent of the wrongfully distributed subsidies.

The announcement comes as a government inspection found a total of 120,869 cases of wrongfully distributed government subsidies until July this year, totaling 64.7 billion won. That is a 66.7 percent increase from 38.8 billion won wrongfully distributed last year.

Many of the violations this year were found in welfare subsidy programs, including over 5,000 false claims for basic pension allowances.

A Finance Ministry official explained there were numerous violations in the welfare sector as 37.4 trillion won, nearly half of the central government’s subsidy budget this year, was allocated to the Ministry of Health and Welfare’s subsidy programs.

Other violations included individuals falsely filing for subsidies under government support programs for businesses affected by Free Trade Agreements.

The government effort to crack down on wrongful subsidy collection comes as it looks to maximize fiscal spending as it faces economic uncertainties.

The government has proposed a 513.5 trillion won budget for next year, a rise of 9.3 percent from this year’s budget.

BY CHAE YUN-HWAN [chae.yunhwan@joongang.co.kr]