Lee Jae-myung "Gyeonggi Province Will Pursue Strong Crackdown on Unfair Construction Practices Until the End"

[Suwon Ilbo=Reporter Park No-hun] An unfair construction business operator (paper company) that had disrupted the construction market through illegal subcontracting has been dealt a decisive blow through Gyeonggi Province's thorough investigation based on public interest reporting. This marks the first case where provincial-level investigation of a public report has resulted in deregistration. Gyeonggi Province Governor Lee Jae-myung clarified his stance on the 13th through his SNS, stating that he will "deliver a strong crackdown on unfair construction practices."

The province received public interest reporting in March from a provincial resident regarding an unfair construction business operator 'Company A' and requested the relevant municipal authority to conduct an investigation. The report stated that Company A had illegally subcontracted a military construction project to specialized construction company 'Company B'.

The problem was that the municipality accepted Company A's explanation, including the subcontracting contract termination agreement, and thus failed to establish the illegal facts. However, the province determined that the report had sufficient credibility and proceeded with a meticulous reinvestigation by directly obtaining relevant evidence such as actual employee lists, work logs, and material inspection records.

The investigation revealed that despite Company B actually carrying out the military construction project, Company A fraudulently issued tax invoices as if it had directly conducted the work.

Additionally, even though all technical personnel of Company A had resigned, the company failed to report this to the Korea Construction Association, resulting in technical personnel being registered only on paper. This constitutes a violation of technical personnel registration standards under relevant laws including the "Construction Industry Basic Act."

Furthermore, it was discovered that two registered directors of Company A held concurrent positions as technical personnel at 'Company C,' where the son of the operator serves as representative, revealing that Company C was a business that failed to meet technical personnel registration standards.

The province notified the relevant municipalities of these matters regarding Company A, a specialized construction business operator, and requested deregistration. Company C, a general construction business operator under the province's jurisdiction, was ordered to receive suspension of business operations.

The province plans to actively utilize public interest reports to enhance enforcement effectiveness based on this investigation achievement. It aims to establish a comprehensive enforcement network that captures all matters not identified through existing pre-investigation or surprise site inspections.

In particular, since most unfair construction practices are conducted secretly through profit-sharing arrangements among project owners, construction equipment rental operators and credential lessors, and construction license lessors, public interest reports from those aware of these matters are expected to make significant contributions to identifying and penalizing unfair operators.

To this end, in addition to the existing public reporting channel "Fair Gyeonggi 2580," the province has diversified reporting channels by creating a dedicated "Paper Company and Illegal Subcontracting Report" page on the Gyeonggi Province website. Going forward, the province plans to promote measures to activate public reporting on unfair construction practices, including raising whistleblower reward amounts.

Governor Lee Jae-myung stated, "The construction industry can be revitalized and provincial resident safety can be ensured only when responsible construction businesses are respected," and added, "Going forward, the province will actively listen to the voices of provincial residents and make concerted efforts to eradicate illegal paper companies and create a fair construction industry environment."

Meanwhile, the province has achieved results in detecting a total of 149 cases of legal violations, including failure to meet construction business registration standards, through advance enforcement and site inspections from October of last year to the present (as of August of this year).

The province requested the Ministry of the Interior and Safety in July to increase provincial and municipal personnel by 50 positions for construction business investigation work, which is absolutely insufficient, and subsequently recommended team-level expansion to both the Ministry of the Interior and Safety and the Ministry of Land, Infrastructure and Transport in August.

The following is the full text of Governor Lee Jae-myung's SNS post.

<Strong Crackdown on Construction Unfair Practices, Gyeonggi Province Will Track to the End>

It started with public interest reporting. A construction company in the province entrusted with a military construction project had allegedly engaged in illegal subcontracting. The relevant municipality conducted an immediate investigation but found no evidence of violation.

However, Gyeonggi Province, which determined that the report had sufficient credibility, investigated further and ultimately uncovered the facts of illegal subcontracting.

Not only did the construction company issue false tax invoices as if they had conducted the work themselves, but they also failed to report to the Korea Construction Association despite all their technical personnel having resigned, resulting in technical personnel being registered only on paper (violation of technical personnel registration standards).

Furthermore, it was additionally revealed that two registered directors of the construction company held concurrent positions at another construction company whose representative is the son of the operator (a business that failed to meet technical personnel registration standards).

The relevant construction companies were respectively penalized with deregistration and suspension of business operations.

Without careful examination, this matter would have been overlooked.

The problem is that most unfair practices in the construction industry are conducted through secret profit-sharing arrangements among relevant parties in this manner. This is why public interest reports from provincial residents are so important.

In addition to the existing reporting channel "Fair Gyeonggi 2580," Gyeonggi Province plans to diversify reporting channels by creating a separate page on its website. If you are aware of illegal activities, please report them actively.

Responsible construction businesses must be able to work in a fair environment for the construction industry to thrive and provincial resident safety to be ensured. In fact, cases of corruption due to the absence of legal provisions are extremely rare. As I always say, if we simply follow the law, the world will become far more fair.

The province has detected a total of 149 cases of legal violations through advance enforcement and site inspections from October of last year to the present. Going forward, we will ensure that unfair practices of vested interest cartels never take root in Gyeonggi Province.(End)