Seoul City Warns of "Strict Response" Despite No Charges in 'Hannam 3 District Overheated Bidding' Case

On the 21st, Seoul Northern District Prosecutors' Office cleared Hyundai Construction, GS Construction, and Daelim Industrial of charges
Seoul City "Violation of Article 30 of Maintenance Project Contract Handling Standards, etc."

On the 28th, at Cheonbokgung Church in Yongsan-gu, Seoul, union members are undergoing verification procedures to enter the regular general meeting of Hannam 3 District. The Hannam 3 District union, which has been embroiled in controversy over illegal contract awards due to overheated bidding, is gathering opinions from union members at this meeting regarding the 're-bidding' for contractor selection and 'proceeding with modifications excluding violations' discussed at the emergency board meeting held the previous day. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Lim On-yu] Despite the prosecution's decision to dismiss charges against the three construction companies in the overheated bidding controversy over the Hannam 3 District redevelopment, the Seoul Metropolitan Government maintained a tough stance, stating it will "strictly manage unfair practices."

On the 21st, the Seoul Metropolitan Government and the Ministry of Land, Infrastructure and Transport stated, "The interest-free support for project costs and relocation expenses proposed during the selection process of the contractor for the Hannam 3 District redevelopment project, guarantees on general sale prices, zero rental housing, and specialized designs violated Article 30 of the Standards for Handling Redevelopment Project Contracts and Article 9 of Seoul's Public Support Contractor Selection Criteria, despite the prosecution's non-indictment decision."

They added, "According to Article 113 of the Urban and Residential Environment Improvement Act (Dojungbeop), administrative authorities can take measures such as invalidating bids and supervising the process," emphasizing, "Failure to comply with related measures may result in penalties under Article 137 of the Act (imprisonment of up to 2 years or a fine of up to 20 million KRW)."

The position of the Seoul Metropolitan Government and the Ministry of Land, Infrastructure and Transport came after the Seoul Northern District Prosecutors' Office cleared Hyundai Construction, GS Construction, and Daelim Industrial of charges earlier that morning. After a special inspection of the bidding process for the Hannam 3 District contractor last year, the Seoul Metropolitan Government and the Ministry of Land, Infrastructure and Transport reported to the prosecution that the three construction companies obstructed the bidding by promising direct or indirect financial benefits to the association, such as interest-free support for project and relocation costs and guarantees on sale prices, which were practically impossible to fulfill.

The Seoul Metropolitan Government judged this as a violation of Article 30, Paragraph 1 of the "Standards for Handling Redevelopment Project Contracts" (Ministry of Land, Infrastructure and Transport Notification), which prohibits offering financial benefits unrelated to construction such as moving and relocation expenses in bidding proposals. However, the prosecution concluded that there were no criminal penalties for this. It also found no charges regarding obstruction of bidding by promising unrealizable terms like "sale price guarantees" in the proposals. Furthermore, allegations of false or exaggerated advertising in the bidding proposals were dismissed as such content is not considered advertising under relevant laws.

Nevertheless, the Seoul Metropolitan Government and the Ministry of Land, Infrastructure and Transport emphasized, "Excessive proposals unrelated to construction in redevelopment projects cause unnecessary costs due to overheated bidding, ultimately increasing the burden on association members," adding, "Problems such as project delays caused by disputes within the association and distortions in housing prices have a broadly negative impact on the housing market."

Accordingly, they stated their intention to eradicate unfair practices through active measures such as invalidating bids if non-construction-related proposals occur during the contractor selection process for redevelopment projects. A Seoul city official said, "We will continue to pursue legal and institutional improvements, including amendments to laws, to preserve the original purpose of redevelopment projects, which is to improve aging residential environments in urban areas, and to expand public contributions through redevelopment projects."

This content was produced with the assistance of AI translation services.