Korea Trade Union Federation (Law Firm Geosung, Attorneys Oi-hun et al., Counsel for the plaintiff-appellant)

The Minister of Labor;

December 22, 2005

1. The defendant's decision to grant subsidies of KRW 2,957,004,315 against the plaintiff on July 7, 2005 and the disposition to revoke the decision to grant or order to return subsidies shall be revoked.

2. The costs of lawsuit shall be borne by the defendant.

The same shall apply to the order.

1. Details of the disposition;

The following facts are not disputed between the parties, or may be acknowledged by comprehensively taking into account the overall purport of the arguments in Gap evidence 1, 2, and Eul evidence 1, 2, 5, and 7.

(1) In around 199, the Plaintiff was a union federation consisting of an industrial associated organization or a nationwide industrial unit trade union, and as a result, inconvenience was caused to use due to the narrowness and aging of the Korea Labor-Management Council Library owned by it, the Plaintiff requested the Defendant to provide subsidies for construction cost of KRW 38.2 billion, excluding the construction cost of KRW 20.3 billion, which the Plaintiff would bear, among the construction cost of KRW 58.5 billion, to remove the existing building and build the Central Workers' Welfare Center on the site of the building.

B. The Defendant calculated the total construction cost as KRW 51.6 billion, and assessed the site for the existing building owned by the Plaintiff as KRW 16.5 billion, and paid the Plaintiff a total of KRW 33.4 billion annually through the National Assembly’s budget resolution procedure, and granted subsidies of KRW 29.7 billion in total from November 2001 to March 2005.

Article 30(1) of the Act on the Budgeting and Management of Subsidies (hereinafter “Act”) states that the Defendant did not notify the Defendant that the Plaintiff would actually receive a refund of part of the construction cost under the so-called “development fund” in the process of applying for and receiving subsidies, and did not submit any special agreement on the development fund to the Defendant, and that in consultation with the contractor, the amount of the construction cost could have been reduced by the amount of the development fund, but did not lower the construction cost to receive the development fund, and received the development fund of KRW 2,957,04,315 in total from August 6, 2002 to April 8, 2005 from the contractor to the contractor, etc., and that this constitutes “when the subsidy was received by unlawful means” under Article 30(1) of the Act on the Budgeting and Management of Subsidies (hereinafter “Act”).

2. Whether the instant disposition is lawful

A. The parties' assertion

(1) The plaintiff

Although the Plaintiff received development funds from the contractor, etc. in the process of removing the deteriorated existing building and establishing a welfare center, the Plaintiff did not link the development fund with the contractor, etc., and did not select the contractor through legitimate procedures, and concluded a contract based on the appropriate construction cost, and concluded a construction contract with the contractor, and thus, received the development fund from the contractor and received the payment of the development fund from the contractor. Therefore, it cannot be said that the Plaintiff received subsidies by unlawful means as prescribed by the Act on the ground that the Plaintiff received the development fund from the contractor, etc.

B. Doz.

In the process of receiving subsidies from the Defendant, the Plaintiff’s failure to notify the Defendant of the special agreement to receive the development fund, etc., and failure to make efforts to reduce the equivalent amount of construction cost constitutes a case where the Plaintiff received subsidies by unlawful means as prescribed by the Act. Accordingly, the instant disposition is lawful.

(b) Relevant Acts;

Attached Form "Related Acts" shall be as specified in the relevant Acts.

(c) Fact of recognition;

The following facts do not conflict between the parties, or can be acknowledged by comprehensively taking into account the following facts: Gap evidence Nos. 1 through 9, evidence No. 10-1, 2, 3, evidence No. 11-1, 2, evidence No. 12, evidence No. 13-1, 2, 3, Gap evidence No. 14 through 19, evidence No. 20, 21-1, evidence No. 20, and 23, evidence No. 24, and part No. 1 through 11, and evidence No. 22, and part of evidence No. 22 shall not interfere with this.

(1) In relation to the establishment of the Central Workers’ Welfare Center, the Defendant specified the terms and conditions of granting subsidies of KRW 29.7 billion in total from November 2001 to March 2005 to the Plaintiff as to the removal, supervision, and construction costs, which cannot be used for any purpose other than the removal, supervision, and construction costs, but did not specify any condition that the Plaintiff would not receive donations in relation to the welfare center building project.

In May 2002, the Plaintiff received design proposals from design firms, and then selected a general construction office inside and outside Korea, which received the highest points after examination and evaluation by the committee organized by the Plaintiff itself, and entered into a design service contract with the design of KRW 1.69 billion, which was partially reduced from the estimated amount of KRW 1.277 billion presented by the above company on June 24, 2002. However, the Plaintiff needs to pay an amount of money to cover indirect expenses, such as construction cost of KRW 1.7 billion and directors’ expenses, which the Plaintiff decided to bear in relation to the establishment of the welfare center. Accordingly, around July 2002, the Plaintiff issued KRW 30 million to the above company as the development fund, and around that time, received the said amount from the Plaintiff as the corporate account.

On October 7, 2002, the Plaintiff offered a bid by applying the detailed evaluation criteria for the capacity to implement a specialized construction-supervising firm, which is published by the Ministry of Construction and Transportation, to the selection of a supervisor, and then selected a specialized construction-supervising firm inside and outside Korea as a supervisor. On November 22, 2002, the Plaintiff entered into a supervision service contract with the amount of KRW 1.695 billion reduced partly by the estimated amount of KRW 1.695 billion, which was presented by the said company. In addition, the Plaintiff received KRW 100 million from the said company as the development fund in the Plaintiff’s account.

In order to select the removal company according to the method of qualification examination according to the rules of government accounting, the plaintiff selected the removal company as the removal company with the highest score by bidding from five removal companies, such as Seongdong Industrial Development Co., Ltd., and evaluating the capacity to implement the project and bid price, and entered into a contract for removal service with the removal company on August 10, 2002, with the construction cost of KRW 580,000,000 as the development fund.

(v) The Plaintiff determined to select a construction executor of a newly constructed building through a designated competitive bidding method, and notified that he will participate in the bidding by selecting seven enterprises, such as the relevant construction company, etc. and notified him of the participation in the bidding on Nov. 18, 2002, subject to the “Detailed Criteria for Qualification Examination for Construction of Facilities in the Government Procurement Service”, and then selected a company subject to preferential negotiations after evaluating its capacity to implement the project and bid price. On Dec. 16, 2002, the Plaintiff entered into a construction contract with the relevant construction company and the construction cost of which amount is KRW 31.6 billion in cash, and received a total of KRW 3.5 billion, including KRW 3 billion in cash and KRW 50 million in construction cost within the building, and received KRW 150 million until April 8, 2005.

⑹ 그런데 원고는 피고로부터 합계 297억 원의 보조금을 교부받으면서 벽산건설 주식회사와 체결한 위와 같이 특약사항을 정한 사실을 알리지 아니하는 등 발전기금 관련 사실을 피고에게 보고하지 아니하였고, 벽산건설 주식회사 등으로부터 발전기금 명목으로 교부받은 금액은 합계 2,957,004,315원이었다.

⑺ 피고는, 시공업체 등으로부터 발전기금을 교부받은 행위는 사실상 법 제30조 제1항 의 부정한 방법으로 보조금을 교부받은 때에 해당하여 2005. 7. 7.자로 피고가 원고에게 교부한 보조금 중 위 2,957,004,315원에 대하여 원고에게 그 금액에 대한 보조금의 교부결정을 취소하고 그 반환을 명하는 이 사건 처분을 하였다.

D. Determination

(i)The standard of interpretation

The phrase "when a subsidy is granted in a fraudulent manner" under Articles 30 and 40 of the Act refers to the case where a subsidy is granted in excess of the amount that should be granted to a business or a project that is not subject to the grant of a subsidy, or in excess of the amount that should be granted to the relevant business, etc. In addition, even if the means that may be deemed to lack somewhat legitimate legitimacy in receiving the subsidy have been used, the case where a legitimate amount is granted to a business, etc. eligible to receive the subsidy, etc. (see Supreme Court Decision 99Do4101, Jan. 5, 2001; 2005Do573, Mar. 25, 2005, etc.).

D. Judgment in this case

In light of such legal principles, the Plaintiff’s efforts to calculate the appropriate amount by complying with lawful procedures in the process of planning and supervision for a welfare center construction project subject to the granting of subsidies, the selection of the removal company and the construction company, and the construction cost reduction, etc.; the nature of the development fund that the Plaintiff received from the construction company, etc. is created to cover indirect costs, etc. accompanying the construction project of the welfare center; it is not used for the original purpose of the subsidy; the entire development fund was received from the Plaintiff’s corporate account; the Defendant did not clearly state that the Plaintiff should not receive the contribution in relation to the construction project of the welfare center, which is a subsidized project; the Plaintiff’s receipt of the subsidy constitutes a case where the Plaintiff received a reasonable amount of the subsidy from the construction company, etc.; and even if the Plaintiff failed to report the fact of receiving the development fund from the construction company, etc., or did not make efforts to reduce the construction cost to the extent possible, it cannot be said that the Plaintiff received the subsidy by unlawful means as prescribed by the Act.

3. Conclusion

Thus, since the disposition of this case is illegal in terms of the grounds for disposition, the plaintiff's claim seeking its revocation is justified and it is decided as per the disposition.

Judges Cho Jae-young (Presiding Judge)