A Study on the Public Finance Illegal Profit Recovery System

The Public Finance Recovery Act was enacted in April 2019 in addition to the disciplinary surcharge system for public officials under the National Public Officials Act and the Local Public Officials Act as subsidies, R&D expenses, allowances, etc. of the state, local governments, and public organizations continue to make false claims and excessive claims. In order to prohibit public financial fraudulent claims and to recover the full amount of fraudulent income, which is unearned income, a sanction surcharge of up to five times is imposed and recovered in consideration of the intention and habitability of fraudulent claims. In this paper, after examining the concept, scope, and legal nature of public finance fraud recovery, we examine the Improper Payment lnfonnation Act of 2002, the False Claims Act, the Federal Improper Payments Coordination Act of 2015, and the Payment Integrity Information Act of 2019 in the United States, and the Subsidy Appropriation Act of Japan to seek implications for Korea In addition, we examine legal issues related to the systematization of pre- and post-systems to reduce fraudulent profits in public finance payments, securing the effectiveness of the whistleblowing system for public finance subsidy recovery, and activating the anonymous proxy reporting system, and suggest improvement measures to enhance the effectiveness of the Public Finance Recovery Act. Before recovering the illicit profits of public finance payments, relevant administrative agencies and public institutions should actively operate programs to strengthen the risk assessment and eligibility review of illicit payments, and after disbursing public finance support funds, they should strictly conduct an audit by an external auditor independent of the administrative agency and public institution to prevent illicit receipt of public finance support funds, and the results of the audit should be posted on the website of the relevant administrative agency to enhance transparency. In addition, in order to eradicate the negative organizational culture toward whistleblowers and the secret receipt of public finance support funds in Korea, whistleblowers should be allowed to file a U.S.-style qui tarn lawsuit only in cases where they make false claims to administrative agencies or public institutions. However, if the relevant administrative agency or public institution allows intervention in the lawsuit and recovers the illicit profits of public finance funds, they should be compensated 35% of the recovered amount to the whistleblower. Given the nature of fraudulent receipt of public financial support funds, the regional National Human Rights Commission's anonymous proxy reporting advisory group should be expanded in a balanced manner to ensure that the anonymous proxy reporting system is activated, and the anonymity of internal reporters should be guaranteed.