"Fueling Personal Vehicles" and More…605 Cases and 14.7 Billion Won in Fraudulent Local Subsidy Use Detected

Ministry to Strengthen Monitoring and Inspections in the Second Half of the Year
Reward for Reporting Fraudulent Subsidy Claims to Be Increased

There were a total of 605 cases in the first half of this year where local governments were caught misusing local subsidies, including inflating the purchase price of a 10 million won exercise machine to 13 million won or duplicating salary payments to staff. The total amount involved was 14,716,700,000 won.

On July 16, the Ministry of the Interior and Safety held the '2026 1st Meeting for Officers Responsible for the Prevention of Fraudulent Local Subsidy Claims' and released these details.

The Ministry organized inspection teams for the misuse of local subsidies in 17 cities and provinces in the first half of the year, and from April 20 to June 20 conducted a comprehensive inspection of fraudulent subsidy claims. As a result, 577 cases (amounting to 9,673,000,000 won) were identified through on-site inspections, and another 28 cases (5,043,000,000 won) through joint inspections.

Previously, only suspicious elements within projects flagged by the Regional Subsidy Detection System were checked by business departments of local governments. However, this year, the inspection teams reviewed every flagged project in its entirety. As a result, both the number of cases and the total amounts detected increased significantly compared to previous years. Last year, the number of confirmed fraudulent local subsidy cases was 815, with a total value of 4,140,000,000 won.

Looking at the types of fraudulent uses detected in the first half of the year, the most common category was 'lack of payment grounds,' accounting for 205 cases and 2,735,000,000 won, or 33.9%. This included paying a spouse for salaries not listed in the project plan or using the subsidy for meal and allowance payments that exceeded allowable standards.

Other misuses included paying for fuel for personal vehicles instead of work vehicles, or the head of an institution spending subsidies for personal association fees. The proportion of these 'use for purposes other than intended' cases was 98 cases (7.8% of all cases) amounting to 780,000,000 won, accounting for 16.2%. Violations of the Local Contracts Act, such as contract splitting, made up 92 cases at 6,443,000,000 won, accounting for 15.2%.

Additional cases detected included: ▲ False applications (5 cases, 290,000,000 won) ▲ Fictitious salary payments (8 cases, 26,000,000 won) ▲ Duplicate payments (5 cases, 47,700,000 won) ▲ Inappropriate use of business promotion expenses (49 cases, 240,000,000 won) ▲ Poorly managed income (9 cases, 1,400,000,000 won) ▲ Project plan change without approval (54 cases, 1,140,000,000 won) ▲ Improper execution of severance reserves, etc. (3 cases, 320,000,000 won) ▲ Improper settlement management (31 cases, 762,000,000 won) ▲ Inappropriate card cancellations (4 cases, 1,960,000 won).

The cases detected this time will be reported to the relevant project departments of each local government for a thorough fact-finding process. Once finalized as fraudulent claims, strict sanctions will be enforced, such as cancellation of subsidy grants, orders for reimbursement, and imposition of additional charges.

The Ministry plans to strengthen inspection activities against the fraudulent use of local subsidies throughout the second half of the year. From September 7 to November 6, comprehensive on-site inspections will be carried out in each city and province, and experts such as certified public accountants will be deployed for joint inspections with local governments.

Reward payments for reporting fraudulent local subsidy use will also be significantly increased. Previously, 30% of the recovered subsidy was paid out as a reward for reports, but going forward, 30% of the total amount actually collected—including recovery orders and additional charges—will be paid to reporting parties as a reward.

For instance, if a report leads a local government to order the return of 1,000,000 won and an additional charge of 5,000,000 won from a subsidy recipient, the reward used to be only 300,000 won, but under the new rules this will rise to 1,800,000 won. Furthermore, the upper limit for additional charges will be raised from a maximum of five times the return order amount to eight times, enforcing even stricter economic sanctions on those who fraudulently claim subsidies.

Minister Yoon Hojung stated, "Because local subsidies are funded by the residents' valuable tax contributions, any waste or fraudulent claim of even a single won cannot be tolerated." He added, "In the second half of the year, the Ministry of the Interior and Safety and local governments will conduct even more meticulous inspections targeting all subsidy misuse, including minor legal violations, to ensure that all cases are tracked without exception and respond strictly to offenders."

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