Over 60 Construction Companies and Representatives Found Guilty of Bid Rigging in 250 Billion Won Waterworks Project

Allegations of Bid Price Manipulation in Water and Sewage Construction Projects

Seoul Central District Court, Seocho-gu, Seoul. / Photo by Honam Moon munonam@

[Asia Economy Reporter Kim Daehyun] Dozens of construction companies that continuously engaged in bid-rigging for aging sewer pipe maintenance and waterworks projects worth about 250 billion won in Seoul were found guilty in the first trial.

On the 28th, according to the court, Judge Park Seol-ah of the Seoul Central District Court Criminal Division 24 sentenced Park, the de facto operator and CEO of Company A (55, male), who was indicted for violating the Construction Industry Basic Act, to one year in prison with a two-year probation. Park was found to have led the crime as the team leader company representative of the bid-rigging group overseeing Yongsan-gu, Yeongdeungpo-gu, and Seongbuk-gu in Seoul. About 60 construction companies involved in the collusion were fined 8 million won each, and around 20 related individuals, including company representatives, were fined between 10 million and 30 million won.

Previously, CEO Park was prosecuted for leading the crime by conspiring with bidders to submit prearranged prices in 294 projects worth about 250 billion won in total, including the '2019 Hannam Stormwater Pump Station Basin Sewer Pipe Maintenance' and the '2018 Yeongdeungpo-gu Sewer Facility Door Repair Project' from 2017 to last year.

Bidding and awarding for aging sewer pipe maintenance and stormwater inlet improvement waterworks projects issued by district offices and waterworks offices in Seoul are conducted through the Public Procurement Service's 'Nara Market' website. However, for about 20 years, so-called 'local companies' have been found to monopolize construction projects issued in specific areas or form bid-rigging groups to avoid encroaching on each other's construction areas and increase their chances of winning bids.

When a construction announcement is made, the team leader company of the bid-rigging group prepares the expected winning bid amounts without overlap and sends emails to affiliated consortium companies and other team leader companies in the bid-rigging groups to communicate construction intentions. According to the prearranged bid amounts, if an affiliated company wins the bid, the local company constructs the project under the condition of receiving 7% of the contract amount.

The team leader company, acting as a communication hub, would distribute part of the local company's profits, considering the number of affiliated colluding companies, when the local company’s construction profits were higher than usual, thereby guaranteeing exclusive construction areas.

Judge Park stated, "Considering the period, frequency, and scale of the crime, the culpability is serious," but added, "However, the defendants generally admitted to the crime, cooperated from the early stages of the investigation, and pledged not to reoffend. Although local companies monopolized the projects, there appear to be no issues such as substandard construction. Various sentencing factors were taken into account." CEO Park appealed the first trial verdict.

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