Bugang Comprehensive Construction Received Advance Payment from Client but Did Not Pay Subcontractor... Fair Trade Commission Orders Measures to Prevent Recurrence
[Sejong=Asia Economy Reporter Joo Sang-don] Bugang General Construction, which received advance payments after being contracted by the client but failed to pay subcontractors, was caught by the Fair Trade Commission and sanctioned.
On the 15th, the Fair Trade Commission announced that it issued corrective orders regarding Bugang General Construction's failure to pay advance payments, non-payment of delayed interest on advance payments, and failure to issue written documents.
According to the Fair Trade Commission, Bugang General Construction received advance payments after being contracted by the client but did not pay subcontractors a total of 233.77 million KRW in advance payments. Under the Subcontracting Act, the primary contractor must pay the subcontractor the advance payment received from the client within 15 days according to the content and proportion of the advance payment. Bugang General Construction later made a delayed payment of the advance payment included in the progress payment due to contract termination between the primary contractor and subcontractor, but did not pay 3.43 million KRW in delayed interest on the advance payment before the contract termination.
Additionally, Bugang General Construction, after entrusting reinforced concrete work for a petrochemical complex construction project located in Ulju-gun, Ulsan in July 2016, instructed additional work due to design changes and increased the construction cost but failed to issue a written document reflecting this increase.
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A Fair Trade Commission official stated, "Payment of advance payments is an obligation of the primary contractor under the Subcontracting Act, and failure to pay makes it difficult for subcontractors to smoothly perform the entrusted work, causing disputes such as contract breaches," adding, "Due to the economic downturn, it is expected that many primary contractors will fail to pay advance payments to subcontractors, so we plan to emphasize the obligation to pay advance payments to the industry for preventive measures."
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