22 indicted in four-rivers collusion

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22 indicted in four-rivers collusion

A slew of construction executives have been indicted for collusion in bidding on the four-rivers restoration project, the signature public works program of the Lee Myung-bak administration.

The Seoul Central Prosecutors’ Office’s special investigation team yesterday announced they indicted 22 former and serving executives of 11 construction companies that made tenders for parts of the 3.8 trillion won ($3.4 billion) project launched in December 2008, which was meant to improve the nation’s four biggest rivers.

The companies are: Hyundai Engineering and Construction (E&C); Samsung Construction and Trading; Daewoo Engineering and Construction; Daelim Group; GS Engineering and Construction; SK Engineering and Construction; Posco Engineering and Construction; Hyundai Development Company; Samsung Heavy Industries; Kumho Engineering and Construction; and SsangYong Engineering and Construction.

Six major builders - Hyundai, Samsung, Daewoo, Daelim, GS and SK - led the collusion, the prosecution said.

According to the prosecution, after former President Lee announced details of the project in 2008, the six companies formed an association of 19 domestic construction companies that they dubbed Hyundai E&C’s Consortium.

But behind-the-scenes negotiations were held to divvy up the large-scale project, which dredged rivers, built riverbeds and improved the environmental impact of the nation’s four major rivers: the Han, Nakdong, Yeongsan and Geum. The prosecution said the 11 indicted companies were confirmed to have participated in the collusion.

Out of the 11, eight won bids on a total of 14 construction jobs designated by the government. Three other companies helped in the bids, although they weren’t selected as winners.

The six major companies won two jobs each. Posco and Hyundai Development Company won one job each.

In order to help a construction company win a certain job, the other 10 companies played tricks to ensure they wouldn’t win, such as submitting shoddy blueprints or setting their bidding prices too high.

Even when they lost bids, they received compensation from the government. Under a law that had been recently adopted, the government compensated bidders for most of the costs of making submissions to win a project.

The prosecution said the government spent 29.3 billion won on such compensation.

In May, the prosecution launched a special probe into the alleged collusion.

BY KIM HEE-JIN [heejin@joongang.co.kr]
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