South Korea’s ruling party is under fire in the wake of a massive subsidy scandal that reaches the upper echelons of government.  The scandal erupted on 6 October when local newspapers reported that the Vice Minister of Health, Welfare and Family affairs, Lee Bong-Hwa, illegally applied for rice subsidies.

Further investigation revealed that over US$ 100 million in governments funds intended for rice farmers instead went to tens of thousands of fraudulent applicants, including many public servants. In the aftermath of the scandal, Lee Bong-Hwa, a close aide to the president, was forced to tender her resignation.

The scandal revolves around a rice subsidy scheme set up by the previously elected government, the Democratic Party (DP) government led by Ro Mu-hyo'n. Subsidies for rice were introduced in order to cushion rice farmers from the opening of the Korean market to foreign imports. Under the scheme, only farmers that actually farm the land are eligible to receive subsidies, rather than the owners of the rice paddies.

However, the subsidy request process did not require applicants to provide proof that they were actually farming land they are making claims for, which seems to have opened the door to widespread fraud.

The Ministry of Public Administration and Security has given public officials the opportunity to submit voluntary reports of misconduct if they illegally received rice subsidies between 2005 and 2008. The result has been 45,000 voluntary confessions from federal and local public servants, including 4 confessions by undisclosed high-ranking officials.

Amid mounting public pressure, South Korea’s Board of Audit and Inspection (BAI) chairman Kim Hwang-sik announced that the BAI would reformulate a list of suspicious subsidy recipients who received rice subsidies between 2005 and 2006. The original list, which included 170,000 recipients, 40,000 of which were public servants, was destroyed in August of 2006.

According to South Korean newspaper Joongang Ilbo, the ruling party is accusing the BAI of hiding the illegal subsides from the public when they were first detected in 2006 under the previous administration. As a result of the controversy, 12 senior BAI officials resigned on 29 October, the latest victims of the growing scandal.

The question of whether the list will be made public has become a hot topic of debate in recent weeks.  NGOs and farmers groups are fighting to get the list published, as rumors swirl of other high profile names appearing on the list.

The issue will be decided as part of a parliamentary investigation into the rice subsidies scheduled between 10 November and 5 December of this year. 

According to the newspaper Chosun Ilbo, a National Assembly committee has been tasked with investigating a series of issues, including the existence of any wrongdoing or cover-up on the part of the BAI, how to recover misallocated subsidies and what regulations need to be improved.

The reconstituted list of suspicious recipients will be submitted by the government to the National Assembly Committee before the investigation begins.  The committee will then decide whether or not to make the list public.