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Gov’t should be responsible for continued inaction on LH reform

Gov’t should be responsible for continued inaction on LH reform

Posted August. 18, 2023 08:12,   

Updated August. 18, 2023 08:12


Since some employees of the Korea Land and Housing Corporation (LH) were accused of real estate speculation in 2021, the agency and the South Korean government alike have reiterated the organization’s commitment to correct its wrongdoings for the sake of reinvention. However, the promise has arguably ended up being empty words given the recent allegations that the LH did not apply reinforcement bars as required in some apartment buildings it ordered to be built, and poorly designed, constructed, and monitored the controversial projects. What’s worse, since it was found that former LH employees work for the companies in charge of designing and supervising the problematic apartment complexes, it has come under the very criticism it received two years ago that its internal control system is poorly run.

It is no news that the LH is criticized for giving special treatment to its former employees. It came under fire for the real estate speculation revealed two years ago involving its former and incumbent employees illegally sharing confidential information on development plans to make money from their secretive investments. Subsequently, it announced measures in June 2021 to reinvent itself by limiting the employment of a wider range of its retirees, including its then-board members and general managers (Class 2) and above. It also promised to ban no-bid contracts with companies where its retired employees work for up to five years from their retirement date.

However, its follow-up reform plan released last year after Lee Han-joon took office as president earlier in the same year specifically upgraded the existing ban on the no-bid contracts in question. Under the plan, the agency should not sign any no-bid contracts with companies where certified appraisers and judicial scriveners who previously worked for the LH belong for five years from the date of their retirement. Consequently, companies with former LH employees on their payroll have been able to take advantage of such loopholes and up to recently won multiple contracts and contributed to the recent scandal of poor project management.

Of course, there is nothing criminal in former public-sector employees retiring and sharing know-how with businesses. Nevertheless, they are supposed to refuse special treatment that may possibly be given to them because of their former connections with the public sector, compete for contract bids fairly, and supervise projects properly. In fact, it is highly doubtful that this organization, which even has no idea whether or not its self-devised reform plan has worked, is capable of making things work in the first place.

At the same time, the government is also to blame for the LH’s poor construction scandal. Although it made it clear to reform the LH following the real estate speculation in 2021, the promise of all-out reform has only ended up making tweaks to the internal organizational structure. For example, unlike the government’s plan to reduce the LH’s workforce by more than 20 percent in two phases, the number of its employees saw a slight decrease of 8.2 percent from 9,683 in 2020 to 8,885 this July.

Even LH workers speak about their company self-mockingly as shown in their comments on an online platform, saying, “Not all that glitters is gold,” “We are on a downward spiral,” “This company is just a big one and that’s all” and so on. As an agency that deals with many responsibilities from housing supply to residential welfare, it needs to upgrade itself in a way that can ensure quality services for the public good. If it fails to change its ways, the government should roll up its sleeves to intervene.