FTC, builders in cross hairs over 4-rivers project probe

The Supreme Prosecutors’ Office said yesterday it is carrying out a second investigation into local construction companies to see if they colluded while bidding for part of the four-rivers restoration project tendered by the government in 2009.

The Fair Trade Commission (FTC) imposed a total fine of 111.5 billion won ($98.48 million) on eight companies in early June after finding them guilty in the course of a three-year investigation, but local civil groups subsequently caused a stir by claiming that the antitrust watchdog failed to do its job properly.

This prompted the second probe, as prosecutors re-examine the facts and also look into how the FTC conducted itself to determine whether it responded with appropriate severity. The FTC chose not to seek prosecution for the builders after confirming their guilt as they cooperated with the investigation.

The prosecutors’ office issued a search warrant and sent investigators to the FTC’s office in Seocho, southern Seoul, to seize related files early last month. After checking the data, it also plans to talk to the construction firms.

While the FTC based its investigation on the fair trade law forbidding collusion, the prosecutors’ office is working to find any violation related to the construction law.

“As the files are not allowed to be released to third parties, the prosecutors’ office had to issue a search warrant to expedite the investigation process,” said Kim Jae-shin, director of the FTC bureau that specializes in probing cartels.

Ahead of bidding for the river restoration project in 2009, the companies supported each to help them succeed by offering the lowest construction costs, according to the FTC.

The probe into the FTC comes as several civil organizations, including the Citizens Committee for the Four-Rivers Restoration Project, accused the FTC of dereliction of duty. They claimed the fair trade watchdog’s fine was too low as it only represented 3 percent of the construction deals won in the bid, and that prosecutions should have been sought.

“We’ll explain exactly how we arrived at the final decision after deep discussions with the prosecutors’ office on request,” said Kim. “There were some changes to the law applied to this case and that brought down the overall fine.”

The groups accuse FTC Chairman Kim Dong-soo of neglect and also said they want the chairmen of 16 construction companies brought to justice.

By Lee Sun-min [summerlee@joongang.co.kr]