[1] Whether “subsidies” subject to the Act on the Budgeting and Management of Subsidies are limited to subsidies granted by the State (affirmative)

[2] The case holding that it is difficult to view the above state subsidy as being used for another purpose in case where the state subsidy and Si subsidy received as an advance payment of the construction cost from the Welfare Foundation was added to the construction company's account as the construction cost, and the construction company received part of it as a loan and used it for personal repayment, etc.

[3] The meaning of "the case where subsidies are granted by false application or other unlawful means" under Article 40 of the "Act on the Budgeting and Management of Subsidies"

[4] The case holding that the application for a subsidy for progress payment for a new construction project of the Welfare Foundation cannot be viewed as an "false application or other unlawful method" solely on the ground that the conditions of the establishment of the Foundation were changed falsely as if the conditions of the establishment were fulfilled normally and reported to the authorities

[1] Article 2 subparagraph 1 of the Act on the Budgeting and Management of Subsidies / [2] Articles 22 (1) and 41 of the former Act on the Budgeting and Management of Subsidies (amended by Act No. 9347 of Jan. 30, 2009) / [3] Articles 40 and 42 of the Act on the Budgeting and Management of Subsidies / [4] Article 40 of the Act on the Budgeting and Management of Subsidies

[1] Supreme Court Decision 2007Do1769 Decided May 31, 2007 (Gong2007Ha, 1015) / [3] Supreme Court Decision 99Do4101 Decided January 5, 2001 (Gong2001Sang, 469) Supreme Court Decision 2006Do8870 Decided December 27, 2007, Supreme Court Decision 2007Do8651 Decided February 1, 2008, Supreme Court Decision 2009Do8751 Decided November 12, 2009

Defendant 1 and one other

Defendants and Prosecutor

Law Firm Head of Law Firm, Attorneys Kimcheon-seok et al.

Gwangju District Court Decision 2009No595 Decided August 12, 2009

The conviction part of the judgment of the court below against the Defendants is reversed, and that part of the case is remanded to the Gwangju District Court Panel Division. The prosecutor's appeal is dismissed.

We examine the grounds of appeal.

1. As to the Defendants’ grounds of appeal

A. Summary of this part of the facts charged

On April 7, 2008, the Defendants received a total of KRW 2.40,000,000 from the office of Gwangjubuk-gu to receive advance payment of construction expenses for the ○○ Welfare Foundation Specialized Care Center for the Aged with KRW 50% of the national expenses and KRW 50% of the Si expenses. As such, as if the above subsidies added KRW 60,000 to KRW 60,000,000,000 to KRW 300,000,000,000 were returned to Defendant 1’s personal account immediately after that day, and Defendant 1 used KRW 1,60,000 out of the above KRW 30,000,00,000 to use it for other purposes, such as personal debt repayment without using it for the prescribed purpose of construction expenses, in collusion with Nonindicted 1.

B. The measure of the court below

In light of the following circumstances acknowledged by the first instance court’s evidence, i.e., ① the Defendants’ act of remitting KRW 300 million to the accounts of Nonindicted Company 2 on April 8, 2008, which was the following day, by using the funds borrowed from Nonindicted Company 1 to the personal account of Nonindicted Company 1; ② at the time, Defendant 1 specified the above funds transferred from Nonindicted Company 1 as part of the advance payment subsidies; ③ Defendant 1 did not use the funds for the purpose of using the funds borrowed from Nonindicted Company 1 in a special election of the Gwangju City Council members, or paying the funds borrowed from Nonindicted Company 1, 2007, by using the funds borrowed from Nonindicted Company 1 for the purpose of using the funds borrowed from Nonindicted Company 1, 200,000 won; ④ The Defendants were not required to return the funds for the above purpose of using the funds to Nonindicted Company 1, 200,000 won for the purpose of using the funds borrowed from Nonindicted Company 1.

C. The judgment of this Court

However, we cannot accept the above judgment of the court below for the following reasons.

Article 2 Subparag. 1 of the Act on the Budgeting and Management of Subsidies provides that the term “subsidies provided for in the above Act” means subsidies (limited to those granted to local governments or to funds for facilities or operation of corporations or individuals) and charges (excluding those granted by international treaties) that are granted by the State for the purpose of creating or providing financial assistance to affairs or projects conducted by persons other than the State, and as prescribed by the Presidential Decree, such subsidies subject to the above Act are limited to subsidies granted by the State (see, e.g., Supreme Court Decision 2007Do1769, May 31, 2007). Examining the facts and records acknowledged by the lower court in light of the aforementioned legal principles, it is difficult to view that the Defendants were granted subsidies that are subject to the Act on the Budgeting and Management of Subsidies in this case by the State 200,000,000 won to the above general account of the above 20,000,0000 won out of advance subsidies received from the North Korean Office of Gwangju, 20,0000 won.

Nevertheless, the court below found the Defendants guilty of this part of the facts charged on the grounds as seen earlier. In so doing, the court below erred by misapprehending the legal principles, failing to exhaust all necessary deliberations, or violating the rules of evidence, thereby affecting the conclusion of the judgment. The Defendants’ ground of appeal assigning this error is with merit.

2. As to the Prosecutor’s Grounds of Appeal

Article 40 of the Act on the Budgeting and Management of Subsidies refers to the affirmative and passive act that is deemed fraudulent means or other acts that could affect the decision-making on the grant of subsidies, even though a person is unable to receive subsidies under the same Act through a normal procedure. In addition, Article 40 of the Act on the Budgeting and Management of Subsidies provides separate penal provisions as to the violation of the administrative procedures of subsidies under the same Act and Article 42 of the same Act. In light of the fact that Article 40 of the Act on the Budgeting and Management of Subsidies punishs only the cases where subsidies are actually granted, and the attempts to do so are not provided for in the same Act, and Article 42 of the same Act provides separate penal provisions as to the violation of the administrative procedures of subsidies, the purpose of which is to punish the violation of the State's financial interests as the legal interest protected by the law and abstractly, and thus, the phrase "the case where subsidies are granted in a fraudulent way" as provided in the same Article refers to the case where subsidies are granted in excess of the amount to be granted for affairs or projects not granted, etc.

According to the records, the court below acknowledged that the Defendants were not guilty of the Defendants’ act of not being able to make a false report as to the establishment of the above corporation, but the establishment of the above corporation was at the discretion of the competent authorities, and there was no clear legal ground that the above conditions of establishment should be the prior performance of the above conditions of the establishment of the above corporation. Rather, in light of the legal principles as seen above and the fact that the Defendants did not receive a false report as to the establishment of the above portion of the subsidy, the Defendants’ act of not being able to receive a false report as to the establishment of the above portion of the subsidy, and there was no lack of notification from the relevant administrative agencies on the condition that the above conditions of the establishment should be preferentially implemented. In light of the above, the court below did not err in the misapprehension of the legal principles and the legal principles as to the establishment of the above portion of the subsidy and the fact that the Defendants did not receive a false report as to the establishment of the above portion of the subsidy by amending the articles of association of the ○○ Welfare Foundation prior to applying for the above progress subsidy.

3. Conclusion

Therefore, among the judgment below, the part of conviction against the Defendants is reversed, and that part of the case is remanded to the court below for a new trial and determination, and the prosecutor's appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench

Justices Ahn Dai-hee (Presiding Justice)