Korean gov’t goes all-out to root out construction cartels, favoritism

Lawmakers from the task force of the People Power Party visit the site of the reinforcement work for the A-15BL apartment in Yangju, Gyeonggi Province on Aug. 8. [Courtesy of LH]

The South Korean government has rolled up its sleeves to speed up investigations into profit sharing in the construction industry, which has been recently exposed in shoddy construction with missing steel bars.

According to multiple industry sources on Tuesday, the Fair Trade Commission (FTC) has sent investigators to the offices of some supervisors responsible for the 15 apartment complexes developed by the Korea Land and Housing Corp. (LH) to examine alleged violations of the Fair Trade Act. They are looking into whether the companies colluded in bidding for the selection of supervisors.

The FTC has sped up its investigation since the government and ruling party announced last week that it would directly probe into design and supervision collusion and unfair subcontracting deals that lead to faulty construction.

The agency also began on-site inspections of Ace E&C Co., Daebo Engineering & Construction Co., and Daewoo Development Co, which constructed the apartments with missing steel bars on Monday.

The FTC is expected to investigate all 13 contractors of the 15 apartment complexes with missing steel bars for alleged violations of the Fair Transactions in Subcontracting Act. The investigation may be extended to other construction sites besides the 15 apartment complexes.

In addition, the Anti-Corruption & Civil Rights Commission (ACRC) has begun accepting reports on cases of public interest violations.

The Ministry of Land, Infrastructure, and Transport said Tuesday that Minister Won Hee-ryong met with ACRC Chairperson Kim Hong-il and decided to work together to identify the causes of poor construction in public housing projects and eradicate preferential treatments or favoritism.

They, in particular, agreed that the role of whistleblowers is crucial in eradicating preferential treatments of former LH officials and interest cartels in the entire process spanning design, construction, and supervision.

Accordingly, the ACRC will announce plans to receive public interest reports this week that includes the protection of whistleblowers.

The ruling party, meanwhile, plans to focus efforts on future measures. The task force of the People Power Party dedicated to revealing causes for poor construction and promoting public safety visited the site of the reinforcement work for the A-15BL apartment in Yangju, Gyeonggi Province.

“We can only eradicate defective construction by removing cartels involved in design, construction, and supervision,” said Kim Jung-jae, chairperson of the task force. “We will improve the legal system after hearing the report on how to tackle cartel practices.”

Kim also underscored the importance of legislative efforts to normalize construction sites, including bills to improve the Framework Act on the Construction Industry and the act related to judicial police officers. “We are thinking of improving the law and system to tighten the relaxed standards and revitalize functions for checks and monitoring in design, supervision, and construction and then to propose a law,” he said.

The task force will receive a report on the issue of subcontractor collusion at the FTC on Thursday and discuss ways to improve laws and systems.