Korean public housing developer LH to announce intensive restructuring measures

[Photo by Park Hyung-ki]

Korea Land and Housing Corp. (LH), the state-owned land developer, is set to announce measures aimed at cutting connections between former employees and its contractors following concerns that the prevalent practice of former LH employees being hired by companies of interest may lead to construction defects.

One of the proposed measures involves giving bonus points to contractors that have no former LH employees when they bid for LH projects.

Another measure under consideration is to limit the placement of former LH personnel at any construction sites to sever direct contact between current LH employees and former employees hired by the contractors.

Additionally, there are plans to require potential contractors to submit a list of LH alumni.

LH President Lee Han-joon mentioned during a press conference last month that the company was considering measures to require all potential contractors to submit a complete list of LH alumni, along with penalties such as bid restrictions or contract cancellations for providing any false information.

According to the audit into LH’s unfair contract practices by the Board of Audit and Inspection of Korea in June last year, 304 out of 604 former high-ranking LH employees were rehired by LH’s contractors between January 2016 and March 2021.

During the same period, LH signed contracts with 3,227 companies that hired its former employees out of a total of 14,961 contracts.

Between Jan.1 2018, and April 16 2021, LH signed contracts with 193, or 65 percent, out of 294 architectural design competitions with companies that hired its former employees.

The audit report also stated that LH did not impose any sanctions upon discovering improper contact by former employees to members of its internal committee to evaluate the capabilities of contractors before or during the bidding or evaluation period.

In May, the underground parking lot at a new LH apartment complex in Incheon collapsed. Following the accident, a comprehensive investigation was conducted into 91 LH-ordered apartment complexes, revealing that 15 complexes had missing reinforcement bars, triggering criticism towards LH.

“It is not easy to completely sever connections with retired employees scattered throughout various places given the company’s 60 years of history, but we are making efforts to implement reforms in a timely manner,” said an LH official.