Gyeonggi Province Imposes Permanent Ban and Criminal Referral on Companies Misusing R&D Support Funds

[Suwon Ilbo=Reporter Park No-hun] Gyeonggi Province has decided to impose strong sanctions, including permanent ban from participation in technology development projects and criminal referral, against a company found to have misused technology development project support funds for purposes other than intended.

This marks the first enforcement case of sanctions against the improper use of research funds following improvement measures for a "fair and transparent R&D; support system" established in January this year.

The company in question, located in Yangju, received 150 million won in support from March of this year under the pretext of conducting Gyeonggi Province technology development projects, but consistently carried out poor performance including failure to submit mid-progress reports that included details of project fund usage.

Accordingly, the province notified the company of immediate contract termination in October and recovered the full 150 million won in support funds through claims on the performance bond insurance certificate.

However, upon conducting an independent investigation after receiving a report related to the company in early this month, the Anti-Corruption and Civil Rights Commission confirmed additional instances of the province's support funds being used for personal debt repayment of the representative and salary expenses for employees who did not participate in the project.

After receiving the case transfer from the Anti-Corruption and Civil Rights Commission, the province decided not to stop at recovering provincial funds but to apply a "one-strike-out system" to the company by the end of this month, permanently restricting its participation in Gyeonggi Province technology development projects.

Additionally, the province plans to make a criminal referral to police against the company on charges of violations of the Local Finance Act, fraud, embezzlement, and breach of trust.

The province also plans to impose a double penalty surcharge on the company and proceed with public disclosure of its name.

Public disclosure of the company's name is only possible when the company has received penalty surcharge sanctions two or more times and the total amount of improper benefits exceeds 30 million won. The actual disclosure will depend on whether the company pays the penalty surcharge in full.

Im Moon-young, Director of Future Growth Policy for Gyeonggi Province, stated: "To establish a fair and transparent R&D; support system, we have already notified performing companies and others through various methods including education, official notices, agreements, and pledges. Since fairness is a core value of the Gyeonggi Province administration of the 7th civil-elected term, we will impose stronger sanctions against improper use of research funds and will disseminate this case to companies currently conducting projects and related agencies to increase awareness of 'transparent R&D;,'" he added.

Earlier, the province established an "Improvement Plan for Fair and Transparent R&D; Business" in January that included ▲public recruitment of evaluation committee members and complete disclosure of evaluation results ▲significant reduction of evaluation periods and faster fund disbursement ▲fair distribution of research and development costs ▲strengthened sanctions against improper use of research funds and introduction of a one-strike-out system ▲public disclosure of names of those improperly using research funds and unification of reporting channels.