Prosecutors Conduct Search and Seizure at KT Telecop and Others Over 'Bid Rigging' Allegations (Comprehensive)

Prosecutors investigating KT Group's alleged 'preferential treatment in work allocation' launched a forced investigation on the 16th.

KT Gwanghwamun Building, Jongno-gu, Seoul [Image source=Yonhap News]

The Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Lee Jeong-seop) sent prosecutors and investigators to about 10 locations, including the KT headquarters in Jongno-gu, Seoul, KT and KT Telecop headquarters, and related officials' offices, to secure relevant materials.

The prosecutors are investigating allegations that during the tenure of former CEO Koo Hyun-mo, KT changed quality evaluation standards to funnel facility management (FM) subsidiary KT Telecop's work orders to subcontractor KDFS. Earlier, the civic group 'Jeong-ui-ro-un Saramdeul' (Righteous People) filed a complaint with the prosecutors in March, accusing former CEO Koo and others of channeling KT Telecop's work to KDFS and providing illicit hospitality to outside directors.

Based on the materials seized on this day, the prosecutors plan to verify the process by which KT Telecop decided on order volumes and the circumstances behind the sharp increase in KDFS's sales.

KT Telecop was selected as the KT Group's facility management work order company, replacing KT Estate, when former CEO Koo took office in 2020. Since then, KDFS's sales have increased more than tenfold, while the sales of KFnS, which previously had the highest sales among subcontractors, have significantly decreased.

Regarding this, prosecutors believe KT Telecop ignored standards for adjusting order volumes such as subcontractor evaluation scores and disadvantaged KFnS, and have booked KT Telecop as a corporation for violating the Fair Trade Act (abuse of superior bargaining position).

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