Corruption scandals besiege Booyoung

Gyeonggi Province Governor Nam Kyung-phil, second from left in a blue jacket, takes a look at a leaky ceiling at an apartment constructed by Booyoung in Hwaseong, south of Seoul, July 31. / Yonhap

By Lee Min-hyung

Booyoung Group is facing a crisis with the prosecution intensifying its investigation into the construction firm over a series of scandals surrounding its owner’s corruption allegation and shoddy apartment construction.

The company has in recent months been investigated by the prosecutors after the Fair Trade Commission (FTC) accused Booyoung Chairman Lee Joong-keun of allegedly excluding seven firms from the list of its subsidiaries for the last 14 years. Lee’s relatives run the seven companies in question.

Booyoung became the first target of FTC Chairman Kim Sang-jo, whose nickname is “the chaebol sniper.” He took office this June.

The widening investigation is expected to put the brakes on the firm’s aggressive expansion into multiple real estate businesses such as resort complexes at major domestic tourist destinations.

The outlook remains murky for Booyoung as Kim has pledged to maintain a hard line to root out the nation’s chaebol-related corruption in line with President Moon Jae-in’s policies.

The latest in a series of controversies surrounding the Seoul-based builder came earlier this month when its apartment complex in Hwaseong, Gyeonggi Province, made headlines for faulty construction. More than 80,000 complaints have so far been made from residents living in 1,316 units of the Booyoung apartment complex.

Amid the growing concerns, Gyeonggi Province Governor Nam Kyung-phil pledged to take all measures to get to the root cause of the problematic construction.

“We are going to extend the on-site investigation to all 10 of the apartment complexes Booyoung is constructing in the provincial area,” Nam said. “If we detect any problems, the provincial government will penalize Booyoung or order it to suspend construction.”

The firm’s fate remains up in the air as the provincial government and the Seoul Metropolitan Government are mulling suspending Booyoung’s business license for construction. Both governments are investigating whether the company used defective construction materials to cut costs and generate more profits.

Adding salt to the injury, the presidential house excluded Booyoung Chairman Lee from a list of the nation’s top 15 business leaders invited to a meeting with the President last month.

The company is the 15th-largest conglomerate by assets here, but the presidential office snubbed Chairman Lee in favor of the chief of Ottogi, best known for its noodle products.

Ottogi has been touted as an exemplar of good corporate practices thanks to its full tax payments, favorable relationships with suppliers and low number of irregular workers. All three points are stressed by the new administration.