Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
GS E&C, LH play blame game over apartment construction site collapse
Rebar and wires are visible at a collapsed underground parking lot of an apartment complex construction site in Incheon, Tuesday. Yonhap
By Park Jae-hyuk
By Park Jae-hyuk
GS E&C and Korea Land & Housing Corp. (LH) have drawn criticism for their attempts to shift the blame onto each other over the recent collapse of an apartment complex construction site in Incheon, according to industry officials, Thursday.
The construction arm of GS Group questioned the apartment complex's design, which was made by a company hired by the state-run real estate developer.
“There could be errors in the apartment complex's design,” a GS E&C spokesman said.
LH, however, emphasized that GS E&C was also involved in designing the apartment complex, located in northern Incheon's Geomdan New Town.
“There could be problems in the builder's construction work or the materials it used for the apartment complex,” an LH spokesman said.
Their attitudes have ignited the anger of owners who were expecting to move into the apartment complex in December.
“Both the builder and the construction project's owner declined to give us any information,” said the leader of the apartment complex's future residents. “We were disappointed by their attempts to shift the blame to each other.”
GS E&C CEO Lim Byeong-yong, left, and Korea Land & Housing Corp. CEO Lee Han-jun / Courtesy of each company
GS E&C and LH began to play the blame game, leading to Minister of Land, Infrastructure and Transport Won Hee-ryong warning on Tuesday that both companies should brace for the possibility of being held responsible for the collapse. The accident occurred last Saturday at the apartment complex's underground parking lot, which is beneath the site of a children's playground.
Incheon Mayor Yoo Jeong-bok ordered an inspection of the city's construction sites that are managed by GS E&C, although there were no casualties in the recent accident.
As a result of the recent developments, GS E&C's stock price, which closed at 21,600 won ($16) last Friday, fell sharply during the first two trading sessions of this week to 20,100 won.
Korea Investment & Securities analyst Kang Kyung-tae warned that in a worst-case scenario, the builder will pay 158 million won every month in compensation for delays in moving residents into the apartment complex.
Even before the recent accident, GS E&C has been saddled with the biggest amount of apartment defects among major building developers. Data provided by the land ministry to Rep. Heo Jong-sik of the main opposition Democratic Party of Korea showed that the ministry was asked between 2020 and 2022 to review 573 cases related to defects in apartment buildings constructed by GS E&C.
In addition, the company's apartment buildings built under the Xi brand name have been in the headlines in recent months, due to various complaints from residents.
In March, residents of the Seoul Station Central Xi Apartment complex were evacuated after cracks were found in its structural columns. Last August, residents of the Bangbae Gran Xi Apartment complex in southern Seoul complained of bad smells, which resulted from GS E&C storing chemicals and other construction materials in the building's underground parking lot.
LH also faced severe public criticism in 2021, as its employees were found to have made speculative investments in real estate, based on secret information that they obtained from the company.