68 Insolvent Construction Companies Including 'Paper Company' Exposed

[Asia Economy Reporter Chunhee Lee] A total of 68 'paper companies' deemed ineligible construction firms, including those registered as construction companies but with no performance for a long period, have been detected.

The Ministry of Land, Infrastructure and Transport announced on the 18th that 68 ineligible companies were identified as a result of a special survey conducted to eliminate ineligible construction companies. This survey was conducted separately from the regular annual surveys carried out through local governments, with the Ministry of Land, Infrastructure and Transport collaborating with local governments and the Korea Construction Association over five months from June to last month.

In particular, this investigation focused on 197 suspicious companies extracted using a newly applied early warning system for signs of poor performance, including companies that failed to report performance for three consecutive years, companies that changed their representative or location within two months after new registration, and companies whose same representative newly registered construction businesses five or more times within the past five years. As a result, 68 companies (34.5%) were detected, significantly exceeding the approximately 20% detection rate of previous surveys.

By violation type, there were 18 cases of insufficient technical capability, 10 cases of insufficient capital, 1 case of office standard non-compliance, and 43 cases of failure to submit other documents. Among those failing to submit documents, 13 companies that had their registrations canceled (business closure reported) during the investigation period after notification of the survey were also included.

For the 68 detected companies, the heads of each city and province, as the competent authorities, will impose penalties such as fines up to 100 million KRW, business suspension for up to six months, or cancellation of registration within three years for repeated violations after due hearing procedures.

Kim Kwangrim, Director of the Construction Industry Division at the Ministry of Land, Infrastructure and Transport, stated, "To strengthen the competitiveness of sound companies and establish a fair construction culture, we plan to continuously improve the early warning system to eradicate ineligible construction companies such as paper companies."

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