Samsung C&T, Korea's largest construction contractor, was given a total of 134.7 billion won in penalties last year by the Fair Trade Commission for collusion in projects such as the Four Major Rivers Project, Yeongju Multi-purpose Dam, subway projects in Incheon and Daegu, the Ara Canal, Seoul-Mokpo KTX railroad, Nakdong River estuary embankment, and Seoul Subway Line No. 9 extension.
It is not just limited to Samsung C&T. A bulk of top-30 construction companies and as many as 51 out of top-100 companies are in danger of being shut out of government-commissioned projects for the next four or five years. This will have repercussions in their bid for overseas projects as well.
The tools of compliance used by the Fair Trade Commission include restriction in publicly commissioned bidding opportunities, criminal accusation, and compensation suits, as well as outright penalty imposition. Construction companies complained that qualification restriction in public biddings is way too much because a single case of collusion may lead to missing out on all public works projects for up to two years. For example, the total length of time Hyundai Engineering & Construction had to endure for such restrictions has been 160 months.
In some cases, the construction companies need to explain to their overseas clients about what's going on in domestic front. For example, the United Arab Emirates government demanded explanation to the Korea Electric Power Corp. consortium including Samsung and Hyundai for the ongoing investigation over the Four Major Rivers project in Korea.
Source: The Korea Economic Daily
