Companies Defrauding Government Subsidies with Fraudulent Reports

Severe instances of fraudulent execution have been uncovered in the "Support Project for Commercialization of Small and Medium Environmental Enterprises," jointly inspected by the Office for Government Policy Coordination and the Ministry of Environment. Numerous illegal activities, including double-billing of project funds amounting to 1.12 billion won and submission of false performance reports, were detected in a total of 339 companies (450 cases including duplicates). This shocking figure, representing 41.7% of all supported companies, severely undermined the original purpose of the project: the development of the environmental industry. As if proving the adage, "Where there is money, there is a loophole," the government's good intentions were corrupted by the tricks of some companies. Unfair execution was rampant, such as submitting the same electronic tax invoice to multiple departmental projects or splitting one person's labor costs across several projects. For example, Company A wrongfully received 140 million won for material costs, Company B received 19 million won for labor costs, and Company C manipulated reports by copying and pasting prototype test photos and content. Furthermore, there were various cases of violating project fund usage standards, including transactions with related parties where outsourced service fees were disbursed to vendors where the representative's family members were registered as executives (Company D, 32 million won), exceeding the mold production cost limit by approximately 27 million won (Company E), and misappropriating project funds with false inspection reports (Company F, approximately 79 million won). More seriously, Company H arbitrarily lowered its sales target, reported false achievements, and even the evaluation committee failed to properly verify this. Submissions of false achievements, such as disguising employees hired before the agreement as new hires (Company I) or presenting existing patent applications as project outcomes (Company J), were also common. Through this inspection, the government plans to file complaints against two companies suspected of serious misconduct and take measures such as restricting project participation and imposing punitive surcharges on 76 companies. This project, which has received a total of 120.9 billion won in support as part of the "Green New Deal" since 2020, has become a hotbed for fraudulent execution due to rampant blind spots in management and supervision. Acknowledging the limitations in preventing all types of fraud despite the introduction of the integrated management system for national subsidies, the government plans to significantly strengthen its management system, including specifying labor cost usage standards, restricting related-party transactions, clarifying performance recognition criteria, and developing an electronic management system. This incident calls for a comprehensive review of environmental industry support policies. It is imperative that both the government and businesses undergo a responsible shift in awareness and strengthen surveillance systems to ensure that public funds are used for their intended purpose, supporting the growth of genuine green businesses, and preventing innovative environmental companies from unfairly losing opportunities.