Major builders face sanctions for collusion on river projects

The antitrust regulator is set to take disciplinary action against a group of major builders for cartel activities during their participation in the Lee Myung-bak administration-led project to refurbish the country’s four major rivers.

The Fair Trade Commission is considering fines for about 20 construction companies and filing a complaint with the prosecution against some executives of several large firms.

It is alleged that some of the 20 companies took the initiative in bidding-price rigging or price-fixing in the national refurbishment project.

According to FTC officials, the firms that allegedly led the collusion include Hyundai Engineering & Construction, SK Engineering & Construction, GS Engineering & Construction, and Samsung Construction & Trade Corp.

Among the other rule-violators are Samsung Heavy Industries, Daewoo Engineering & Construction, Hanwha Engineering & Construction, POSCO Engineering & Construction, Kumho Industrial, Hyundai Development and Daelim Industrial.

The combined regulatory fines on the builders could reach about 100 billion won ($86.5 million), an FTC official said.

In 2009 when the allegation emerged, FTC investigators visited the offices of major construction companies bidding for turnkey contracts for the projects on the Han, Geum, Nakdong and Yeongsan rivers.

They are thought to be suspected of manipulating construction costs totaling about 1 trillion won and sharing districts via back-room deals.

A variety of suspicions of irregular practices arose when 11 major builders swept the 15 turnkey construction contracts that went up for bidding first.

According to a report by an opposition lawmaker, the bidding prices between the winner and runner-up was less than 3 percent in 10 of the contracts.

The Lee administration’s controversial Four Rivers project, which struggled to gain full-backing from politicians and environmentalists, is estimated to have greatly benefited the wallets of builders involved.

By Kim Yon-se (kys@heraldcorp.com)