Over 120 cases of misused low-interest sports loans worth W38.6b uncovered

More than 120 cases of misuse and inadequate documentation have been uncovered in a government low-interest loan program designed to support the sports industry.

The Office for Government Policy Coordination's joint government anti-corruption task force, working with the Ministry of Culture, Sports and Tourism, said Thursday it had identified 117 problematic cases totaling 38.6 billion won ($28.2 million) after reviewing how the sports industry loan program was being run.

The program, administered by the Korea Sports Promotion Foundation, provides low-interest loans at 2 to 3 percent for the installation or operation of sports facilities to help develop the industry. Total lending under the program stood at around 260 billion won last year.

The probe examined 600 of the 2,860 loans the foundation disbursed between 2019 and 2024, reviewing how the funds were distributed and managed.

Investigators found 13 cases worth 14.2 billion won in which loans intended for sports facility installation were used for other purposes.

In those cases, borrowers had received funds under the pretext of building sports facilities but in practice used the money for unrelated purposes, such as running lodging businesses or hagwon.

An additional 84 cases worth 14.1 billion won were flagged as suspected off-purpose use, with borrowers submitting tax invoices unrelated to the loan program or records of personal expenditures as settlement documents.

Investigators also found 15 cases worth 5.5 billion won in which borrowers paid themselves large salaries or used the funds to cover rent on their own buildings, and five cases worth 4.8 billion won in which a different operator — not the original loan applicant — was running the facility without the foundation's approval.

The government also said roughly 60 percent of all loans disbursed over the past five years were concentrated in golf-related businesses, including screen golf and public golf courses, while gyms, swimming pools and bowling alleys each accounted for only 3 to 6 percent, revealing a significant imbalance in support across sports sectors.

The Office for Government Policy Coordination said the foundation had failed to verify supporting documents, leaving improper settlement items undetected, and had conducted on-site inspections for only about 5 percent of all loans. "The foundation's management of the loan program has been found to be comprehensively deficient," it said.

Based on the findings, the office plans to order the recovery of approximately 13 billion won from loan recipients. Cases in which illegal conduct — such as forged tax invoices — has been clearly confirmed will be referred for criminal investigation.

Going forward, the office said it will shift loan management away from its current bank-dependent system to one directly overseen by the foundation, and will introduce sports loan disbursement guidelines — tentatively titled the "Sports Loan Execution Guidelines" — to establish clearer standards, as part of broader efforts to reform the system.