President Lee Jae-myung warned that companies engaging in corporate fraud and illegal practices could face bankruptcy under a dramatically enhanced whistleblower reward system.
"Going forward, companies could go bankrupt," Lee said at a Cabinet meeting held at Cheongwadae. "Because whistleblowers will receive rewards worth hundreds of billions of won, illegal activities will inevitably be exposed."
The president criticized longstanding corporate misconduct. "It seems that fraud and illegal activities have become almost customary in our industrial and economic fields—collusion, profiteering, and abuse of monopoly positions," he said. "At least during our administration, it would be best to abandon any thought of making money through such practices."
Lee directed the Fair Trade Commission to implement a system that would pay whistleblowers a percentage of corporate fines with no upper limit. "Companies that have engaged in misconduct really need to be careful," he emphasized.
The president asked FTC Chairman Ju Byung-ki whether the commission was preparing a system to provide unlimited rewards based on recovered penalties. Under the proposed framework, rewards of up to 10% of recovered amounts with no ceiling would activate insider reporting and make it impossible to conceal illegal activities.
Lee provided a specific example: if a 4 trillion won collusion case were discovered and resulted in a 400 billion won fine, the reporting employee could receive up to 40 billion won—10% of the penalty.
"I've said that stock manipulation will 'ruin families' and 'destroy households,' but going forward, if anyone commits fraud or illegal acts seeking profit, they will face enormous fines and the illegal activity will inevitably be exposed," Lee said. "If we make rewards unlimited, this will cover past conduct as well."
The president noted that the maximum penalty rate would increase from 20% to 30%. "Companies could actually go bankrupt going forward. If there are massive fines for fraudulent collusion, unfair practices, or abuse of monopoly positions, plus a 10% reward, there will probably be no way to stop people from reporting," he said.
"From now on, you must completely abandon any thought of profiting through unfair or fraudulent transactions," Lee added. "This is not a threat—I'm telling you this with good intentions. Prepare in advance."
Regarding specific system design, the president suggested clarifying procedures for when internal participants report violations. "We should check whether there is an immunity or reduction system for whistleblowers and guarantee it. I'd like rewards to be given even to those who were involved," he said.
However, Lee added: "Consider reducing rewards somewhat for those directly involved compared to third-party reporters. If they report, punishment would be reduced and the reward would also be slightly decreased."