Board of Audit and Inspection: Disaster Relief Funds Paid to Ghost Companies with Criminal Intent... 110.2 Billion Won Misallocated

Audit Results on the Implementation of Small Business Support Projects
Notification of Report and Recovery Measures to the Minister of SMEs and Startups

On the 25th, the Board of Audit and Inspection confirmed that cash support projects such as disaster relief funds for small business owners facing management difficulties due to COVID-19 were provided to 560,000 business operators contrary to the intended purpose due to the Ministry of SMEs and Startups' imprecise system design.

It was revealed that 300.7 billion KRW was paid to businesses whose damages were not objectively verified, or amounts totaling approximately 2.6847 trillion KRW were provided in excess of the scale of damage, and that businesses unrelated to COVID-19 damage, such as solar power operators, also received support.

On the same day, the Board of Audit and Inspection announced the results of the audit on the 'Implementation Status of Support Projects for Small Business Owners, etc.' and stated that due to the Ministry of SMEs and Startups' poor verification and post-management, cash support amounting to 110.2 billion KRW was provided in violation of the announced support requirements.

The audit results showed that the Ministry of SMEs and Startups, due to inadequate verification of support conditions and poor post-management, provided approximately 12.1 billion KRW in cash to businesses that violated quarantine measures, and about 54.6 billion KRW to businesses that were effectively closed or suspended with zero sales. It also uncovered cases where disaster relief funds were duplicated by 30 billion KRW for businesses that received both the Emergency Employment Stability Support Fund and the Business Closure Rechallenge Incentive, which are not allowed to be paid simultaneously according to the announcement, as well as 13.5 billion KRW mistakenly paid due to staff errors.

Additionally, some businesses exploited government policies to fraudulently receive about 2.1 billion KRW in disaster relief funds, and even 'ghost corporations' established for crimes such as voice phishing received over 100 million KRW in disaster relief funds. Cases were also confirmed where real estate rental businesses that did not operate quarantine facilities fraudulently received about 2 billion KRW in disaster relief funds on the grounds of operating quarantine measures.

The Board of Audit and Inspection explained, "We notified the Minister of SMEs and Startups to thoroughly manage post-support tasks and informed them of measures to conduct additional investigations and take actions such as prosecution and recovery against seven businesses that submitted suspicious forged certificates as supporting documents and ghost corporations."

[Image source=Yonhap News]