Fair Trade Commission Issues Corrective Order to 'MBGJ Togeon' for Delayed Subcontract Payment

The Fair Trade Commission imposed a corrective order on MBG Construction for failing to pay subcontracting fees on time and substituting part of the payment with the deposit for an apartment contract that it constructed.

According to the Fair Trade Commission on the 1st, MBG Construction subcontracted 14 works, including tile and waterproofing work, to seven subcontractors during the apartment construction project in Muan-gun, Jeollanam-do. However, it was found that 396 million KRW of the subcontracting fees were not paid within the statutory payment period (60 days from the receipt of the goods). For three subcontractors, it was agreed to settle 161 million KRW of the subcontracting fees through payment in kind instead of cash. This method acted as an intermediary step allowing the subcontractors to take over the constructed apartments from the project owner without a deposit. From the subcontractors’ perspective, they gave up receiving the overdue subcontracting fees in cash and instead received apartments with mid-term loan payments.

The Fair Trade Commission ordered MBG Construction to pay the unpaid subcontracting fees and delayed interest amounting to 108 million KRW and issued a recurrence prevention order. The Commission stated, "This measure is expected to contribute to improving the practice of payment in kind, which significantly affects the cash flow of subcontractors."

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