Kakao probes allegations of foul play in contractor selection

Kakao Data Center Ansan [Courtesy of Kakao]

Kakao confirmed on Tuesday that it has initiated an internal audit after receiving allegations of wrongdoing in the process of selecting construction contractors for its data center and complex cultural facility Seoul Arena.

At the center of the contractor selection controversy is the tech giant’s first data center, Kakao Data Center Ansan, which was completed last month at Hanyang University’s ERICA campus, along with Seoul Arena slated to be built in Seoul by 2025, a large-scale multipurpose cultural space to accommodate more than 20,000 concertgoers for a single event.

According to the allegations, Kakao did not conduct a transparent public bidding process and instead engaged in private contracting with specific companies affiliated with major conglomerates, thereby funneling construction projects to these entities.

In response, Kakao said that the Ansan data center underwent an open bidding process involving a total of three construction companies before a contractor was selected, adding that it is currently in the process of investigating the selection method for Seoul Arena’s construction contractor.

The construction cost for Kakao Data Center Ansan amounts to a total of 424.9 billion won ($328 million), out of which about 143.6 billion won was contracted with construction companies. Kakao also said the construction expenses for Seoul Arena are set at 300.8 billion won, denying some allegations that its total construction expenses reach 2 trillion won.