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Abuse of Subsidies

Posted June. 05, 2010 02:17,   


The Korean Federation for Environmental Movement received 2.2 billion won (1.8 million U.S. dollars) from the government from 2001 through last year to preserve the water quality of the Han River. The federation took 98 percent of the subsidies of more than 2.3 billion won (1.9 million dollars) from a government agency designated to protect Han River estuaries. The environmental group`s secretary general was arrested on the charge of embezzling 200 million won (166,000 dollars) of the money. The Culture, Sport and Tourism Ministry gave a private organization 996 million won (829,000 dollars) to support its events from 2006 to 2008. The organization reaped profits of 860 million won (716,000 dollars) but the ministry gave it 300 million won (250,000 dollars) more last year instead of recovering the funds.

The government is poorly managing subsidies given to private organizations. According to the Board of Audit and Inspection, tax money is given to private organizations haphazardly. The Korean People`s Artist Federation received than 1.9 billion won (1.6 million dollars) in 2006 and 2007 from Arts Council Korea to carry out 34 projects. The internal government watchdog caught a staff member in charge of accounting at the organization for embezzling 500 million won (416,000 dollars) by fabricating receipts. A staff member at another civic organization pocketed 280 million won (230,000 dollars) of 1.1 billion won (915,000 dollars) in government subsidies.

Of the Culture Ministry’s budget of 3.17 trillion won (2.64 billion dollars) this year, 32 percent or 1.02 trillion won (850,400 dollars) are subsidies for private organizations. The government financially assists 3,800 projects by 1,967 organizations. Handing out subsidies seems one of the ministry`s main tasks. From 2006 to 2008, many projects were given subsidies under no clear rules; 48 percent were given money according to the needs of the ministry department in charge and 45 percent were decided on by ministry officials. Eighty-nine percent of projects were determined by private organizations or public officials. This is in contrast to what the Public Administration and Security Ministry does. In giving tax money of 30 billion won (25 million dollars) to private organizations, it identifies social demand, clearly defines selection standards, and holds open bids through an independent committee.

Based audits of three departments of the Culture Ministry on subsidy provision from 2006 to 2008, the government watchdog said 33 percent or 53.2 billion won (44.2 million dollars) were illegally given to private organizations. The ministry announced in April a comprehensive review of the subsidy system for private organizations. Before submitting next year`s budget, the ministry must clarify how to reform the system. Assistance to private organizations is meaningful only when it raises public interest and welfare.

Editorial Writer Hong Kwon-hee (konihong@donga.com)