Kim Rahn is the managing editor of The Korea Times. Since joining the company in 2003, she has covered various beats including the presidential office, Seoul city government, the Bank of Korea and the tourism industry. In 2014, she won the Society of Publishers in Asia (SOPA) award for her coverage of the ordeals of migrant women in Korea.
Builders accused of bid rigging in railway project
By Kim Rahn
The prosecution said Tuesday it was filing charges against 14 major construction companies for rigging bid prices to win orders to construct sections of the country’s high-speed rail network.
Prosecutors have indicted 14 executives of the firms, without physical detention, for engaging in the bid rigging.
The builders are: GS Engineering & Construction (E&C), Daelim, Hyundai Development Company, SK E&C, Daewoo E&C, Hyundai E&C, Doosan E&C, Ssangyong E&C, Dongbu Corp., Samwhan Corp., KCC E&C, Lotte E&C, Hanjin Heavy Industries and Construction, and Kumho Industrial.
Another six constructors ― Halla Corp., Kolon Global Corp., Keangnam Enterprises, Namkwang E&C, Sambu Construction and Samsung Heavy Industries ― were fined between 30 and 50 million won.
They allegedly fixed bidding prices for construction of parts of the state-initiated KTX railroad between Osong, North Chungcheong Province, and Mokpo, South Jeolla Province. The construction started in 2006 with a budget of 8.35 trillion won for scheduled completion by the end of the year.
After the Korea Rail Network Authority invited bids for 13 sections of the railway in 2009 to select builders offering the lowest price, officials from seven major companies among the 14 met at a restaurant in Seoul and colluded in price fixing, according to the prosecution.
Through a lottery, they allegedly decided which company would win which section. Other companies would then put in a higher bid for a section than that of the company they earlier designated.
The builders auctioned off bids at high prices to avoid suspicion of collusion: they won bids at 78 percent of previously estimated costs for each section, compared with 73 percent on average.
For those who didn’t win in the lottery, the other firms allowed them to take part in the construction as partners or promised to give them a chance to win other bids in future.
Earlier in July, the Fair Trade Commission fined 28 builders a combined 435.5 billion won for collusion in the railroad project, and asked the prosecution to investigate them. Of the 28, prosecutors indicted 21, excluding seven that did not actively participated in the scheme, and another one, Samsung C&T that voluntarily reported the wrongdoing.