Solar power projects festering with corruption

Underreporting tax or other types of tax evasion must be scrutinized as a part of an overhaul of the country’s renewable projects.

The government has uncovered additional waste of huge tax money from the renewable energy projects ardently pushed by the past Moon Jae-in administration, which was bent on investing in renewables for power generation to replace nuclear reactors and fossil fuel. The Office of Government Policy Coordination led a government probe on 6,600 renewable energy projects that received special loans from 2019 to 2021, under which government-backed loans were offered for the expenses of building solar panels if tax invoices were submitted. Half of the loans worth 480 billion won ($368 million) were extended in an illegal or irregular way.

The cases show how slack the supervision was. Loans to 549 cases worth 97.4 billion won were extended to businesses that submitted fake invoices. Two hundred six cases worth 40.1 billion won involved offering loans beyond the invoice amount. A total of 308 billion won in loans for other 1,900 cases were lent on “inflated invoices,” which were even canceled or scaled down later.

The government requested a further investigation into the practice of underreporting to tax authorities. As many as 286 entities took out 39.8 billion won in loans by feigning farmers who wanted to build solar panels in their fields of mushroom or insect breeding.

The loans were doled out from the power industry infrastructure fund, which takes out 3.7 percent from electricity bills. The fund is operated by the Ministry of Trade, Industry and Energy and managed by the Korea Electric Power Corporation (Kepco). The money from utility bills has gone to cheaters to fatten their bellies. The fund has backed 12 trillion won worth of projects since 2018. It is outrageous that the public fund was leaked at the expense of the ballooning deficit at Kepco and rising electricity charges.

The government also uncovered that 57 billion won worth of projects in power-generating regions were also illicitly or poorly managed. The money is designed to subsidize the regions hosting power stations. Although some communities received money to build community centers, they did not build any. A community head even bought a storage with the money and resold it to his relative. Some of the subsidies went to a power-related research and development project that had been suspended. But the money was not retrieved.

More leaks and misspending can be discovered because the probe examined just half of the funds spent. The government plans to come up with supplementary measures, as it should expand renewable energy projects to help respond to climate change. The government must punish supervisors and prevent further leaks of the money by toughening examinations of documents. Underreporting tax or other types of tax evasion must be scrutinized as a part of an overhaul of the country’s renewable projects.