Get to the bottom of the favoritism

The Board of Audit and Inspection (BAI) has found a number of illegalities in the government’s massive project to install solar panels in reclaimed Saemangeum, North Jeolla. President Moon Jae-in praised the world’s largest solar panels on water as the “beginning of a new millennium” in the country’s transition to renewable energy. But the BAI discovered that the Korea Hydro & Nuclear Power Corporation (KHNP) in charge of the project commissioned the designing of the solar-panel complex to Hyundai Global, a subsidiary of Hyundai Group, which did not have a license to design such facilities at the time. The KHNP also skipped the required procedure of staging an open bidding for qualified companies. Instead, it made a private contract with the Hyundai subsidiary.

Problems with the multibillion-dollar project are nearly endless. Three months before the signing of a formal contract with KHNP, Hyundai Global already commissioned a subcontractor for a 19.5-billion-won ($16.4 million) project in a 22.8-billion-won project. As a result, Hyundai Global could make 3.3 billion won in profit for nothing. A BAI report found that three senior officials at the KHNP had been aware of the ineligibility of Hyundai Global before it won the bid. After the government watchdog started looking into the suspicion, the KHNP canceled its contract with Hyundai Global.

Such findings could be just the tip of the iceberg as the BAI’s probe was confined to the designing of the solar panel complex. The audit began after a North Jeolla-based civic group in May petitioned for an audit of the project, raising suspicions over the KHNP allegedly having given favors to Hyundai Global. The environmental group claimed that the Hyundai subsidiary won a designing contract worth 120 billion won — which takes up 35 percent of the entire installation cost for panels on Lake Saemangeum — even without participating in bidding. The civic group also raised suspicion that Hyundai Global had won a 27 percent stake in the construction of power transmission and transformation facilities, too. And yet, the BAI did not inspect the remaining four suspicions citing the ongoing investigations by the Fair Trade Commission (FTC) and the police.

The Saemangeum project calls for a whopping 4.6-trillion-won budget in total. The KHNP set up Saemangeum Solar Power, an SPC, with Hyundai Global after the public corporation was chosen in October 2018 as an entity to handle the gargantuan project. Since the establishment of the special purpose company, a plethora of suspicions has arisen over potential favoritism. The BAI demanded the KHNP censure three related workers at KHNP, but that’s not enough.

Former KHNP President and CEO Lee Kwan-sup, who opposed the government’s nuclear phase-out policy, resigned in January 2018 with 10 months left before his term expired. As the alleged favoritism took place after current President Chung Jae-hoon came into office, he must take responsibility. As he initiated this project, President Moon also must make clear his position. The police and the FTC must get to the bottom of the case. It’s just a matter of time before the whole picture of the dirty deals comes to the surface.