Correction Order Issued to Jeongmin Construction for Failing to Pay Subcontract Amount of 15 Million Won

Fair Trade Commission "Non-payment of Subcontracting Fees, Delay Interest, and Bill Discount Fees"

Fair Trade Commission. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Moon Chae-seok] Jeongmin General Construction, which failed to pay approximately 15 million KRW in subcontract payments to a subcontractor within the legal payment deadline, has received a corrective order from the Fair Trade Commission.

The Fair Trade Commission announced on the 7th that the company did not pay the subcontract payment of 10 million KRW, delayed interest of 4.24 million KRW, and bill discount fee of 620,000 KRW to the subcontractor.

In December 2016, Jeongmin Construction entrusted a subcontractor with gas facility work during the construction of an apartment in Seongju-gun, Gyeongsangbuk-do.

Although the deliverables were received in November 2017, the company has not paid the subcontract payment of 10 million KRW even after more than 60 days from the receipt date. Out of the contract amount of 160 million KRW, only 150 million KRW was paid.

Additionally, from the day 60 days after the receipt of the deliverables, the company paid 70 million KRW of the subcontract payment but did not pay the delayed interest of 4.246 million KRW. When paying the remaining subcontract payment of 10 million KRW, the company must also pay delayed interest at an annual rate of 15.5%.

Out of the 150 million KRW paid so far, 50 million KRW was paid by promissory note, but the discount fee of 626,000 KRW from the date of note issuance and 60 days after the receipt of the deliverables until the note maturity date was not paid.

Kim Hyun-soo, head of the Busan office of the Fair Trade Commission, said, "Due to the economic downturn, cases where the original contractor does not pay subcontract payments are expected to occur frequently," and added, "We plan to continuously request the industry to comply with the Subcontracting Act, including early payment of subcontract payments."

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