Gov’t bets big on whistle-blowers with 254.6 billion won reward budget

The government plans to raise its budget for whistle-blower rewards nearly eightfold to 254.6 billion won  ($190 million) next year, which could help expose large-scale wrongdoing. But the move has also led to concerns that authorities are leaning too heavily on public tip-offs.

The government combined whistle-blower reward budgets across 17 ministries and agencies into a single allocation for the 2027 proposed budget — 222.2 billion won more than this year’s 32.4 billion won, <a s attack on political correctness: Strategic move or political misstep?

The Financial Services Commission’s (FSC) rewards budget for reporting unfair trading jumped about 80-fold from 440 million won this year to 35.1 billion won next year, and that for reporting illegal activities involving farmland surged about 157-fold from 7 million won to 1.1 billion won.

The

The Anti-Corruption & Civil Rights Commission’s (ACRC) rewards budget for reporting corruption and public-interest cases grew from 5 billion won to 45.2 billion won; the Fair Trade Commission’s (FTC) budget for reporting collusion and other violations increased from 1.8 billion won to 24.8 billion won; and the Korea Customs Service’s budget for reporting smuggling rose from 800 million won to 17.5 billion won.

The government says that the larger budget covers the bigger payouts that it expects, as ministries tilt toward scrapping related reward caps, raising payout rates and loosening eligibility standards for whistle-blowers.

The FSC and FTC removed such caps and now pay rewards in proportion to the crime’s illicit gains or consequent fines. The Korea Customs Service also scrapped its caps and increased compensation for internal whistle-blowers.

“The issue of people who reported major cases receiving relatively low compensation has been repeatedly pointed out,” an ACRC official said. “If we remove the cap and change the system, we could pay [them] so much more, and we reflected that in next year’s budget.”

Additionally, as rewards are calculated as a share of the money recovered by the state, the government expects payouts to increase as it toughens fines and other penalties.

The PPP, however, has criticized the plan, accusing the government of trying to fill the investigative gap left by the overhaul of the prosecution system “with public reports.” Under legislation pushed by the ruling Democratic Party (DP), the Supreme Prosecutors’ Office was abolished on Oct. 2 after 78 years, and its powers were split between two new bodies, as the Lee Jae Myung administration argued that prosecutors had held too much power by both investigating and indicting suspects and had used it to carry out politically motivated investigations.

Critics have warned that the government launched the new agencies without enough staff or clear rules, which could leave serious crimes uninvestigated during the transition.

“[The DP] wants to increase [whistle-blower] rewards budgets first without sufficiently explaining the need for a new fund and a large-scale increase,” a PPP policy committee official said. “It could end up only increasing the number of informants [including professional ones] chasing rewards rather than improving the effectiveness of detecting crimes.”

Past expansions of whistle-blower rewards programs have brought in more tip-offs, but assessments have been mixed on how much the additional reports actually helped uncover wrongdoing. When the Financial Supervisory Service offered special rewards of up to 50 million won for reporting insurance fraud in 2022, significant tips received by the regulator in the first half of that year rose 24.8 percent from a year earlier.

In contrast, a reward program for reporting traffic violations introduced in 2001 was abolished at the end of 2002 after “carparazzi” — professional informants who installed hidden cameras at spots with frequent violations to collect rewards — ran rampant. The case showed how such programs can become moneymaking schemes that repeatedly target violations that are easy to film rather than preventing accidents.

“The perception that one could be reported has a preventive effect that reduces illegal activity, so there are cases in which [whistle-blower rewards] are unavoidable as a policy tool,” said Im To-bin, a professor at Seoul National University’s Graduate School of Public Administration. “But public authorities may come to rely on people’s reports rather than resolving structural causes [behind the crimes]. Social trust could also decline in the process of people suspecting and monitoring one another.”

Others question whether the money will even be spent next year. The National Assembly Budget Office noted that rewards are paid only after reports go through investigations and reviews and that the government sharply raised the budget without fully accounting for that time lag.

In a recent report on the Korea Customs Service, the office said that “there are shortcomings in calculating the required amount in consideration of the actual size and timing of reward payments,” adding that “it is necessary to adjust the 2027 planned amount to an appropriate level and reflect the required amount in stages based on future operating results.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.