Samsung C&T, Hyundai Development collude in subway line No. 9 construction

An expert checks the stability of the soil at the construction site of subway line No. 9 in Bangi-dong, southern Seoul, where some sinkholes were spotted, in this file photo taken on Aug. 20. / Yonhap

By Park Jin-hai

Samsung C&T and Hyundai Development were notified Sunday that the Fair Trade Commission (FTC) will fine each of them for collusion during bidding for the construction of the subway line No. 9, the FTC said Sunday

Samsung C&T will face a fine of 16.2 billion won fine, and Hyundai Development Company 2.8 billion won.

The bidding was for a contract to build a 1.56 kilometer stretch of line connecting Jamsil Hospital and Seokchon subway station.

The FTC said that the two builders submitted mutually agreed bidding prices so that the successful bidder could secure a contract worth more money.

It also filed a complaint with the prosecution against the two builders, involved with Seoul City’s subway line No. 9 that contributed to the recent scare over the appearance of “sinkholes”, for allegedly colluding during the bidding process. The 1.56-kilometer section is among the areas where a number of sinkholes were found.

After a series of phone conversations and in-person meetings between working-level officials, Samsung C&T proposed a figure that was 94.1 percent of the estimated 199.8 billion won construction cost, while Hyundai Development submitted figure that was 94.5 percent of the cost during the August 2009 bidding process.

This was done because they knew if the estimates were above 95 percent of the assumed construction costs, the FTC would suspect and launch an investigation into possible collusion.

“There were rumors in the market that a builder will be subject to the FTC investigation in the event that its bidding price tops 95 percent of the actual building costs,” said an FTC official.

They tried to ensure the higher bidding price possible and avoiding investigation at the same time, according to the FTC.

In November 2009, under the collusion, they submitted the pre-agreed bidding prices and Samsung C&T that scored more in the design category won the bid.

“It is a collusion that took place in the area of public transportation. We will expand the investigation of construction companies for possible collusions,” said the FTC official.