Gyeonggi Province Uncovers 28 Violations Including Illegal Contracts and Tax Delinquency in Siheung Redevelopment Consortium

[Suwon Ilbo=Reporter Park No-hoon] Following an inspection of a redevelopment consortium in Siheung by Gyeonggi Province, 28 violations including illegal direct contracts and tax delinquency exceeding 100 million won were uncovered, leading to criminal referral and corrective order measures.

Gyeonggi Province collected redevelopment and reconstruction consortiums for inspection from cities and counties to ensure transparent and fair operations, and inspected the Siheung A Redevelopment Consortium from August 23 to 27.

This marks the first time Gyeonggi Province has directly inspected a redevelopment consortium, rather than cities and counties doing so.

The province took action on 23 of the 28 violations detected, including 5 criminal referrals, 2 corrective orders, 15 notices of caution, and 1 notification to relevant departments. The remaining 5 cases are existing referral matters or will be handled after receiving authoritative interpretation from the Ministry of Land, Infrastructure and Transport.

Major violations detected include the A Consortium's execution of a general competitive bid contract as a direct contract, for which the province issued a criminal referral.

Specialized construction projects involving only partial facilities rather than entire buildings can only be executed as direct contracts if they are 100 million won or less, and other services can only be direct contracts if they are 50 million won or less.

The A Consortium divided a 120 million won general competitive bid contract into 80 million won and 40 million won and executed them as direct contracts. Additionally, it also executed a 350 million won sales agency service as a direct contract.

The consortium was also found to have proceeded with budget allocations for the year without obtaining approval from the consortium general meeting.

Just as the government budget must be approved by the National Assembly in advance, redevelopment consortiums must also specify detailed project budgets for the year and obtain consortium general meeting approval before execution.

The A Consortium entered into a 1.6 billion won contract with a relocation management service provider without general meeting approval and then increased the amount by 2.1 billion won to a modified contract of 3.7 billion won without supporting documentation, resulting in a criminal referral.

The province also issued corrective orders for tax delinquency exceeding 100 million won, including omitted withholding tax on the office director's performance bonus, and issued notices of caution for minor matters such as inadequate information disclosure.

Meanwhile, Gyeonggi Province plans to conduct promotional campaigns with cities and counties to ensure consortiums obtain general meeting approval for annual project budgets before budget execution. In particular, the province is reviewing plans to expand inspections of redevelopment and reconstruction consortiums to protect consortium members' interests and foster a culture of fairness.

To date, Gyeonggi Province has worked to strengthen transparency in consortium operations by opening free online lectures on redevelopment and reconstruction that any resident can access on the Gyeonggi Lifelong Learning Portal (www.gseek.kr) and raised the reward for reporting consortium misconduct from 5 million won to 100 million won.

Hong Ji-seon, head of the Urban Housing Bureau of Gyeonggi Province, stated: "Redevelopment and reconstruction improvement projects sometimes involve project costs exceeding 1 trillion won, and many irregularities are likely hidden in improper contracting processes. These all become burdens for consortium members and residents and drive up housing prices," adding "Going forward, we will work with cities and counties to find and eradicate such illegal acts to build a transparent and fair society."