By Yi Whan-woo
The prosecution said Thursday it is investigating allegations that the Fair Trade Commission (FTC) failed to take proper and appropriate action against 19 builders who allegedly rigged their bids in the four-river refurbishment project.
The Seoul Central Prosecutors’ Office said it is looking into documents seized from the commission, the country’s anti-trust body, to confirm whether it deliberately failed to report the bid rigging to the prosecution.
The investigation comes after an environmental group filed a complaint with the prosecution against the FTC in June when the commission slapped a combined total of 111.5 billion won ($98.4 million) in fines on only eight of the 19 firms for price manipulation.
The eight included affiliates of the nation’s leading conglomerates. Daelim Industrial was fined the most at 22.5 billion won, followed by Hyundai Engineering and Construction with 22 billion won.
GS Engineering and Construction was fined 19.8 billion won; SK Engineering and Construction 17.8 billion won, Samsung Construction and Trade Corp. with 10.3 billion won, and Daewoo Construction with 9.6 billion won.
Kumho Industrial and seven other companies received warnings and orders to rectify their unfair practices.
The FTC, however, did not report the case to the prosecution. And the activists of the “People’s Committee of Anti-Four Rivers Restoration Project” claimed that this was “nonsense.”
According to the group, the bid-rigging case for the state project must be referred to the prosecution regardless of the FTC’s measures.
“The FTC gave a pathetic excuse, saying that it conducted a thorough investigation and concluded that the case was not that serious,” said Lee Hang-jin, a staff member of the environmental organization.
The river project was carried out on a turnkey basis meaning that the selected developer completed the construction and sold or turned it over to a buyer in a ready-to-use condition.
Under such a method the builder is in charge of every process including all the details and each of the 19 builders saw a rise in revenue through the projects, according to Lee.
“The amount of fines for the eight companies accounted for only 4 percent of the revenue earned through this large-scale project. Such a penalty was nothing but a slap on the wrist,” he said.
The group said the case is “very serious,” adding that the law states that a fine of up to 10 percent of revenue should be imposed if there was collusion in a bid.
The government spent taxes to cover extra spending on the project and Lee said that this caused “serious damage” to taxpayers.
He said that the firms are also responsible for destruction of the environment through the project.
“The private firms are the only winners in this project, and we can’t just let them escape under the soft punishment by the FTC. We expect the prosecution to make them pay suitably.”