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Police Expose Construction Bribe Ring

Posted August. 04, 2006 03:20,   


127 major construction company executives, redevelopment and reconstruction union executives, professors, and lawyers were convicted of handing over and receiving large sums during the selection process of the construction company to carry out redevelopment and reconstruction projects, among other misdeeds.

Unlike in the past, bribery was involved not only in the selection process of the construction company, but in many other parts of the construction deal.

The Criminal Investigations Department of the Supreme Prosecutors’ Office announced on Thursday that it installed a joint investigation team in 16 of its local prosecutors’ offices, and arrested 37 and issued a restraining order on 82 people after a special investigation from this February to July. They arranged for the search of the eight who escaped.

Of the 127 who were convicted, 59 were executives of companies partnered with the construction company, and 38 were executives of redevelopment and reconstruction unions. There were also 30 others who did not belong in either category.

Even regular union members were bribed-

Executive Director Mr. Jung (under restraint) of Isu Engineering & Construction hired a publicity personnel manager called an “OS” agent from a consulting firm to hand over 300 million won to steering committee members and regular members of the union. “OS” refers to the phrase outsourcing. The construction company bribed the union, because it knew the important role the union plays in the construction company selection process. 60 publicity personnel, mostly women in their 40s, went to work a month before the election process started. Seven of the most active members visited union members most likely to vote for Isu Engineering & Construction and gave them 100 thousand won each. After offering the money, the publicity personnel even received the signatures of union members.

270 union members were convicted. The rest of the publicity personnel played minor roles such as greeting pedestrians. If the publicity personnel met union members who were against their company, they halted their practice of offering kickbacks. The union member, who received the most bribes, received 3.7 million won in the course of just one month.

After showering union members with money, Isu Engineering & Construction was selected as the construction company of the redevelopment project of this region.

Union executives gobbled up bribes-

Four, including Mr. Yoo, the union leader of the Seodaemun-gu housing redevelopment union, and the advising attorney Mr. Kim, received a total of 11 billion won for helping Mr. Park, a representative of the construction Company “Y,” acquire a commercial building owned by the union worth 60 billion won for only 27 billion won and pledging to settle disputes within the union.

This group is known to have received four boxes with money tallying 1.0 billion won in an alley and drove off with the money in the trunk.

Mr. Kim, who was the leader of the Jamsil-Siyeong Apartment redevelopment union, was convicted of receiving 360 million won from a construction company in exchange for a pipe system construction project in 2003.

Bribery in every step of the project-

The “City and Living Quarters Improvement Act” was initiated in July 2003, forcing unions to select the construction company in charge of the project after receiving authorization for the project in hopes of rooting out bribery between the construction company and union. It has been found that construction companies hired publicity personnel to bribe the union early from the establishment of the reconstruction committee.

Isu Engineering & Construction handed over 1.5 billion won as preparatory funds in order to be selected as the construction company of the Donam Sixth Territory redevelopment project.

The bigger the bribes, the higher the sale price-

Cha Dong-eon, the chief prosecutor of the Criminal Investigations Team 8 at the Seoul Central Prosecutors’ Office, who participated in this investigation said, “The bribes and lobby funds are all reflected in the cost of the construction, and therefore the burden goes to the union members in the form of a higher sale price.”

According to the investigation, the average promotion fee spent by construction companies in relation to redevelopment projects is estimated to be from six to seven billion dollars. While Isu Engineering & Construction spent a total construction fee of 99 billion won for the Donam Sixth Territory redevelopment project, the official promotion fee was 2.2 billion won.

The prosecutors’ office called upon the Ministry of Construction and Transportation to cancel Isu Engineering & Construction’s construction license or bar it from operating for one year.