Subsidy Act Violation Defense Case | Acquittal of a Client Charged With Violating the Subsidy Act

The client, who was preparing to relocate to a provincial region, entered into an agreement with a local government and sought to use the government's regional investment promotion subsidy program.

However, even though the relocation and investment were actually carried out, certain documents submitted during the subsidy application process became an issue, and an allegation of false entry was raised.

On the ground that the company had applied for the subsidy as if the relocation had been fully completed even though it had not relocated all of its facilities, the investigative authorities applied charges of fraud and violation of the Subsidy Act against the representative director and an executive.

From the client's standpoint, although the subsidy application procedure had been carried out in accordance with the statutes in effect at the time and the actual investment was likewise being made, the client faced the dual crisis of criminal punishment and recovery of the subsidy.

Accordingly, in order to set right this unjust situation, the client came to a corporate-law attorney and requested assistance.

Article 33 of the Subsidy Act provides for the recovery of subsidies that have not been properly executed or that have been paid by an unlawful method.

The grounds for recovery of a subsidy are as follows.

Where any of the above grounds arises, the competent central agency or the subsidy program operator may set a deadline and order the return of the subsidy together with the interest accrued, and where necessary, may also take measures such as restricting payment or extending the return deadline.

The corporate attorney closely analyzed the statutes underlying the subsidy program and the related public notices.

The attorney demonstrated that the documents that had become an issue in the application procedure at the time were not mandatory submission documents and did not have a direct effect on the decision to grant the subsidy.

On this basis, the attorney emphasized that the prosecution's assertion of an act of deception needed to be reexamined.

The attorney systematically verified and documented the actual progress of the client company's investment and its relocation record.

Through this, the attorney emphasized the fact that, even though some documents were incomplete or there was a time lag, the application was not a false one.

In addition, by establishing in detail the process of submitting documents to the relevant authorities and the company's compliance with internal procedures, the attorney highlighted the company's good faith and lawful conduct.

The attorney logically refuted the structure of ‘act of deception → disposition of the subsidy’ asserted by the prosecution.

The attorney emphasized that the granting of a subsidy does not depend simply on whether construction has commenced, but is a decision that comprehensively takes into account the company's scale of investment, its relocation plan, and policy considerations.

Through this, the attorney argued that no legal causal relationship was established.

In subsidy projects, statutes and public notices are frequently amended and the interpretive standards are ambiguous, so even companies that have followed the proper procedures often become subjects of investigation.

In such situations, a failure to obtain the assistance of an expert with extensive knowledge in the relevant field may lead to unwarranted criminal punishment and financial loss.

Drawing on extensive experience in corporate criminal matters, including subsidy cases, our firm protects clients' rights and interests through precise analysis and proof of the facts.

In addition, depending on the circumstances, we form a task force with experts from each field to provide comprehensive assistance.

If a subsidy-related dispute arises, we encourage you to prepare a tailored response strategy through a 🔗Legal Consultation Appointment.