Lee Hyo-jin covers the Bank of Korea, the banking industry and broader financial news. Her previous beats include foreign affairs, North Korea and general reporting on Korean society.
Yoon administration tightens monitoring of civic groups receiving gov't subsidies
Lee Kwan-sup, senior presidential secretary for policy planning, speaks during a briefing at the presidential office in Yongsan, Seoul, Wednesday. Yonhap
By Lee Hyo-jin
By Lee Hyo-jin
The Yoon Suk-yeol administration vowed on Wednesday to tighten monitoring of the accounting systems of civic groups that receive government subsidies to ensure transparency in their financial management.
The government, in particular, focused on the fact that the amount of subsidies offered to nonprofit organizations saw a substantial increase during the previous Moon Jae-in administration, adding that it will look further into possible accounting irregularities.
The presidential office disclosed the results of an interim inspection on the use of state funds provided to private civic groups nationwide, which revealed dozens of cases of audit fraud and misuse of funds over the last seven years.
“Improving transparency in the use of government subsidies of nonprofit civic organizations had been selected as one of the key tasks of the Yoon Suk-yeol government,” senior presidential secretary for policy planning Lee Kwan-sup said during a briefing. “We have conducted the investigation, based on which we will come up with improvement measures.”
He stated that the probe, conducted over the last two months, was spurred by a corruption scandal surrounding the Korean Council for Justice and Remembrance for the Issues of Military Sexual Slavery by Japan, a civic group dedicated to supporting survivors of sex slavery. The organization made headlines in 2020 for its alleged accounting malpractice and embezzlement.
According to the presidential office, a total of 31.4 trillion won was provided between 2016 and 2022 to nonprofit groups including associations, foundations, welfare centers and civic groups.
During the 2017-2022 Moon administration, the amount of government subsidies increased by 400 billion won each year.
An estimated 5.4 trillion won went to civic groups this year, a sharp increase from 3.56 trillion in 2016. During the same period, the number of nonprofit groups receiving government funds increased to approximately 27,215 from 22,881.
The inspection also found that a total of 153 “problematic” activities have been run by civic groups receiving state assistance, resulting in 34 billion won being returned to the government. Such activities included those that do not align with the purpose of the civic group or falsifying documents to receive more funds.
For instance, a group of middle and high school students funded by the Ministry of Gender Equality and Family was accused of engaging in political activities by holding anti-government rallies. A civic group supporting victims of the 2014 Sewol ferry sinking disaster was found to have misused funds 10 times.
The presidential office ordered each ministry to conduct a thorough inspection of how the funds are being used by the civic groups by June 2023, when it will review whether to halt offering funds to certain groups. It will also revise measures to expand external audits to private organizations.
Wednesday's announcement came a day after Yoon ordered an overhaul in the monitoring system of civic groups receiving government funds to improve their accounting and financial management.
“People will not tolerate if taxpayers' money is found to be used by cartels with vested interests. There should be no sanctuary in using government funds,” he said during a Cabinet meeting, Tuesday.
Last week, Yoon vowed to tackle “corrupt” labor unions to enhance transparency in the unions' financial structures. He criticized them for their lack of transparency and ordered measures to force major unions to disclose their accounting systems to the public.
In response to claims that the government's recent moves stressing transparency in labor and civic groups by demanding that they disclose their accounting books may violate the right to freedom of association, the presidential office explained that the measures are intended at restoring trust in society.
“Whether it be labor unions, civic organizations or private corporations, improving transparency is the key to enhance trust in society, which is the foundation of growth,” a senior official said during a briefing, Thursday.