Korea SMEs and Startups Agency (KOSME) will revamp its response system, including introducing an indemnity system, to block unlawful brokers' undue interference targeting small and midsize corporations preparing for government support programs.
The Ministry of SMEs and Startups received briefings on the 12th at the Sejong Government Sejong Convention Center from a total of 15 institutions, including Korea SMEs and Startups Agency (KOSME) and Korea Technology Finance Corporation (KOTEC). No Yong-seok, the 1st Vice Minister of the Ministry of SMEs and Startups (MSS), asked Kang Seok-jin, the Korea SMEs and Startups Agency (KOSME) president, who delivered his first work report, to "explain the biggest difference from the existing response system this year, given that third-party undue interference is a long-standing problem."
Kang said, "There are no penalty provisions for unlawful brokers, and even if you report them, there has been little practical benefit," adding, "We will activate the reporting system and make it clear that reporting yields benefits, such as paying small rewards."
According to Korea SMEs and Startups Agency (KOSME), only 29 reports of unlawful brokers were filed over the past six years. Unlawful brokers approach corporations under the name "consultant," maximize private gain by extracting as much government support as possible and taking a cut. They are different from "consultants" who provide advice needed for applying to government support programs and running corporations and receive an agreed-upon fee.
Kang said, "Those who engage in unlawful broker activities with bad intent will be reported to the Korean National Police Agency so they can be restrained," adding, "We will designate a Head of Team-level manager at regional headquarters and branches to encourage reporting and conduct monitoring of key corporations."
An indemnity clause will also be newly established. Until now, corporations that received some help from unlawful brokers in the process of obtaining government support hesitated to report for fear of disadvantages. Korea SMEs and Startups Agency (KOSME) has prepared an indemnity clause this year that imposes no sanctions upon reporting so corporations and related parties can raise issues without burden.
The Vice Minister noted, "Many hesitated to file complaints for fear of suffering harm themselves, so please publicize that the indemnity system can encourage reporting."
Minister Han Seong-sook of the Ministry of SMEs and Startups also stressed that a strong response to unlawful brokers is necessary to ensure that 4.06 trillion won in policy funds operated by Korea SMEs and Startups Agency (KOSME) is properly delivered to corporations in need. Han said, "We have operated quite a few reporting centers, but they have not functioned effectively," adding, "This year, we intend to use available means, including legislation, to make sure it does not fizzle out."
There were also calls for simplifying paperwork. Lee Byeong-gweon, the 2nd Vice Minister of the Ministry of SMEs and Startups (MSS), noted, "Unlawful brokers have expanded to even small business owners, and some people around us receive calls from those posing as public institutions." He added, "People engaged in their livelihoods have no time for paperwork, and they cannot separately study funding details or application methods," and "to eliminate the environment in which brokers can parasitize, we need to simplify document submission."