[2022 National Audit] Gas Stations Rife with Tax Evasion and Fake Oil... Are Crackdowns and Penalties Effective?

Up to 43 Days for Judgment After Detection... Most Administrative Sanctions Concluded
Rep. Kim Han-jung, "Urgent Need for Effective Crackdown and System Improvement"

[Office of Representative Kim Han-jung]

[Asia Economy Reporter Ra Young-cheol] Among the cases of illegal petroleum distribution detected over the past five years, undocumented transactions for tax evasion purposes and quality non-compliance were found to be the most frequent.

In particular, most cases of counterfeit petroleum sales end with administrative sanctions, raising concerns about the effectiveness of crackdowns and penalties.

According to data submitted by the Korea Petroleum Management Service to Kim Han-jung, a member of the National Assembly's Industry, Trade, Energy, Small and Medium Enterprises Committee (Democratic Party·Namyangju-eul), out of 3,058 cases of illegal petroleum distribution detected in the past five years, 1,179 cases involved undocumented transactions for tax evasion and other disruptions to distribution order, making it the most common violation.

This was followed by 1,046 cases of quality non-compliance, 376 cases of counterfeit petroleum sales, 234 cases of under-quantity sales, and 223 cases of illegal kerosene refueling.

Among these, counterfeit petroleum, which causes serious harm to consumers by damaging car engines and causing traffic accidents that can lead to casualties, mostly ends with administrative sanctions.

Of the 44 cases detected between January and August this year, sanctions included 2 warnings, 13 fines, and 20 business suspensions (including registration cancellations).

Under the Petroleum Business Act, manufacturing, storing, or selling counterfeit petroleum can result in imprisonment for up to five years or a fine of up to 200 million won, while under-quantity sales or undocumented transactions can lead to imprisonment for up to two years or a fine of up to 50 million won.

Furthermore, the process for determining counterfeit petroleum takes 2 to 3 days, notifying local governments takes 7 days, and local government hearing procedures take 10 days, totaling up to 43 days after the illegal determination, which diminishes the effectiveness of enforcement.

In the National Assembly audit of the Korea Petroleum Management Service, Assemblyman Kim Han-jung pointed out the need for thorough crackdowns and system improvements regarding illegal petroleum distribution such as counterfeit petroleum sales, emphasizing, "Especially, counterfeit petroleum sales are serious crimes that harm public livelihood, and more effective enforcement and system improvements are urgently needed to prevent consumer damage."