'Gwangju Collapse Accident' HDC Hyundai Development Company Faces Maximum Penalty of 'Registration Cancellation or 1-Year Business Suspension' (Comprehensive)

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[Asia Economy reporters Kangwook Cho and Taemin Ryu] The Ministry of Land, Infrastructure and Transport (MOLIT) has requested the Seoul Metropolitan Government, the competent authority, to impose the strictest legal sanctions on HDC Hyundai Development Company, which caused the collapse accident at the Hwajeong I-Park new construction site in Seo-gu, Gwangju, last January.

Under current law, the highest level of disciplinary action is either 'cancellation of registration or a one-year business suspension,' and MOLIT’s request is interpreted as effectively demanding cancellation of registration.

Seoul City has already stated that it will promptly impose administrative sanctions within six months upon receiving MOLIT’s request. The actual sanctions are expected to be imposed by September at the latest.

On the 28th, MOLIT held a briefing at the Government Sejong Complex and announced the 'HDC Hyundai Development Company Apartment Collapse Accident Sanction Plan and Measures to Eradicate Poor Construction.'

MOLIT emphasized that considering the cause and scale of damage of this accident, the strictest sanctions should be applied to the prime contractor Hyundai Development Company, requesting Seoul City to impose cancellation of registration or a one-year business suspension.

Article 83, Clause 10 of the current Framework Act on the Construction Industry stipulates that if poor construction due to intentional or negligent acts causes significant structural damage to a facility and poses a public risk, a business suspension of up to one year or cancellation of registration may be imposed. Since MOLIT stressed the 'strictest sanctions,' this is interpreted as a request for cancellation of registration.

Additionally, MOLIT requested the competent authority, Seo-gu Office in Gwangju, to impose the same sanctions on the subcontractor Gahyeon Construction Industry. For the supervision company, Architectural Office Gwangjang, MOLIT requested Gyeonggi Province to impose a one-year business suspension under the Construction Technology Promotion Act.

MOLIT also plans to coordinate with related agencies to file criminal charges with the police against the contractor and supervisors to ensure criminal punishment.

An MOLIT official stated, "The authority to impose administrative sanctions on companies lies with the local governments, so MOLIT cannot specify the level of punishment. However, considering the severity of the accident and public concern, we are disclosing the details of the sanction request."

MOLIT also announced measures to eradicate poor construction on the same day.

Going forward, under the principle of zero tolerance for poor construction, MOLIT will strengthen construction quality management and enhance supervision.

First, companies responsible for fatal accidents due to poor construction will be subject to a 'one-strike, two-strike out' system. If a facility suffers major damage causing three or more civilian deaths or five or more worker deaths, the contractor’s registration will be canceled and new registration will be restricted for five years (one strike out). Companies caught twice for poor construction within five years will have their registration canceled and face a three-year ban on new registration (two strikes out).

In addition, punitive damages will be applied in cases of fatal accidents caused by poor construction, expanding liability for damages up to three times the existing maximum. Poor construction companies will be restricted from participating in public projects and will face disadvantages in public land supply and housing and urban fund support.

Furthermore, MOLIT plans to reclaim the authority delegated to local governments for sanctioning poor construction companies and pursue a system where MOLIT can impose sanctions ex officio. The ex officio sanction targets will be limited to accidents involving three or more deaths, ten or more injuries, or collapses or overturns requiring reconstruction.

To enhance supervision, supervisors will be required to order work stoppage upon discovering risks such as major structural defects. Supervisors will be exempt from liability for damages incurred by clients or contractors due to such stoppages.

MOLIT will expand the supervision and safety management activities of the Korea Land and Housing Safety Management Institute to include not only public but also private construction projects, granting it authority for on-site inspections and guidance.

To prevent poor construction, major decisions such as design changes and temporary facility dismantling must be recorded by contractors and submitted to supervisors. The use of standard specifications, currently applied only to public projects, will be extended to private projects, with detailed provisions on winter cold-weather concrete management, formwork, and shoring dismantling included in the standard specifications.

Additionally, to prevent abuses such as unreasonable shortening of construction periods, a procedure for reviewing the adequacy of appropriate construction periods and costs will be introduced for clients, ensuring thorough management from the permit stage.

Kwon Hyuk-jin, Director of the Construction Policy Bureau at MOLIT, said, "We will promptly implement the poor construction countermeasures announced today to ensure that innocent citizens and workers are never again tragically sacrificed at construction sites, and to eliminate public anxiety about construction site safety by concentrating all our efforts on strengthening construction safety."

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