LH to launch team to crack down on 'construction cartel'

The state-run Korea Land and Housing Corp. (LH) said Wednesday it will launch an "anti-cartel" headquarters as part of its effort to overhaul poor construction practices and stamp out the "construction cartel," a matter under scrutiny by the ruling party for potential collusion during the previous Moon Jae-in administration.

LH CEO Lee Han-jun made the announcement at an emergency meeting of key officials, after a government-led probe found that the agency had failed to detect a number of underground parking lots at apartment complexes had not installed the necessary reinforcement bars.

The poor construction practices were discovered after an underground parking lot at an apartment complex that was being constructed by LH in Geomdan New Town, Incheon, collapsed in April.

On Tuesday, President Yoon Suk Yeol stressed the importance of "eradicating cartels with vested interests” in the construction industry, saying that they are "the root cause" of the substandard construction practices that led to the collapses.

"Cartels with vested interests" is a phrase regularly used by President Yoon to voice his suspicions regarding possible malpractices in the previous administration. Despite its frequent use, the exact definition of this term is yet to be clearly defined.

The new anti-cartel office will be located in LH's southern Gyeonggi Province headquarters, and be led by the head of LH's construction safety and technology division. The new office will operate until the cartel-related issues have been fully resolved.

"We deeply regret the incident that happened at LH apartments, which should provide the safest living conditions. Ensuring proper construction safety and investigating allegations about the LH construction process is imperative for the future of LH," Lee said.

He pledged to meticulously audit every stage of all construction projects, including design, assessment, contract discussions, construction, procurement of materials, and supervision.

The LH CEO detailed the primary responsibilities of the team, which include investigating allegations of preferential treatment for construction companies from the Moon administration and the then-ruling Democratic Party of Korea, and addressing any other corruption, collusion, and fraud between them.

Specifically, LH is set to investigate companies suspected of receiving favorable treatment, and undertake legal action against those implicated in the substandard construction of 15 apartment complexes. The corporation will seek assistance from the Korea Fair Trade Commission to investigate potential bid-rigging among subcontractors.

As part of construction industry reform, Lee also revealed plans to strengthen the role of construction contract agencies, revamp on-site monitoring, broaden the supervisory division, and possibly enforce a one-strike rule against unlawful activities by design and supervision firms