Reviewing Changwon City's Buffer Detention Facility Project from Scratch? ... Audit Office Calls Feasibility Study False

Changwon Special City in Gyeongnam, currently conducting an internal audit of large-scale public-private development projects, has now pointed out issues with the Buffer Storage Facility lease-type private investment project (BTL).

The City Audit Office held a press conference at the City Hall Press Center on the 21st to announce the audit results of the project.

According to the city, the buffer storage facility is a facility that temporarily stores wastewater discharged from the complex to prevent environmental pollutants from directly entering rivers due to fires or leakage accidents within industrial complexes.

Following the revision of the Water Environment Conservation Act in March 2015, the installation of buffer treatment facilities was made mandatory, and with the revision of the Private Investment Act in March 2020, it became possible to install such facilities as private investment projects.

Earlier, Changwon City decided to promote the facility as a private investment project and selected Construction Company A as the initial proposer through a public contest.

Subsequently, in August 2021, the project was exempted from the preliminary feasibility study by the Ministry of Economy and Finance, passed the eligibility review by the Public Investment Management Center in May 2022, and completed the National Assembly’s approval process for the private investment project limit in December 2022.

Shin Byung-chul, Auditor of Changwon City, Gyeongnam, is announcing the audit results of the buffer detention facility lease-type private investment project.
[Photo by Lee Se-ryeong]

The City Audit Office revealed that during this process, the responsible department followed the installation location and methods proposed by the private business operator rather than the buffer treatment facility installation and operation plan established by the city in 2016.

In the process of selecting the initial proposer in 2020, a project proposal including total project cost estimation, financing plan, equity capital input plan, price, and price report was required, but the evaluation criteria were designed excluding price.

The project costs of Construction Company A’s 355.4 billion KRW and Construction Company B’s 205.3 billion KRW, submitted with proposals focusing only on technical evaluation items such as installation site, installation standards, and site utilization plans, were not considered in the evaluation.

The evaluation committee was supposed to be composed of technical experts in accordance with related ordinances, assessing the appropriateness of installation quantity, site, capacity, and the excellence of applied technology, but the use of the private investment review committee, which lacked relevant expertise, lowered the fairness and reliability of the evaluation.

Data related to the audit of the rental-type private investment project for the buffer detention facility in Changwon-si, Gyeongnam. [Data provided by Changwon Special City Hall]

The City Audit Office also pointed out that the responsible department violated the Improper Solicitation and Graft Act.

Before the evaluation, they received an email from Construction Company A requesting special management because the high project cost could influence the review, and on the day of the evaluation, they asked the review members to focus their evaluation mainly on the installation site.

The City Audit Office stated that a project proposal and report were submitted, falsely indicating that a feasibility study, which the city had never conducted, was carried out.

Despite Construction Company A writing in the proposal that a feasibility study had been conducted by the city, the responsible department overlooked this and proceeded with follow-up actions.

During the process of requesting project eligibility review from the Public Investment Management Center and applying for exemption from the preliminary feasibility study to the Ministry of Environment in 2021, reports were prepared and submitted based on the falsely stated feasibility study, and it was even revealed that Construction Company A was requested to prepare these documents.

Even after receiving notification from the Public Investment Management Center in 2021 that installation capacity changes were possible according to the revised guidelines for buffer treatment facility installation and operation management, the city did not review the cost reduction through changes in facility installation capacity proposed by Construction Company A, which was also identified as a problem.

Changes in retention facilities according to the revision of the Ministry of Environment guidelines. [Data provided by Changwon Special City Hall]

Shin Byung-cheol, the Auditor, said, “Since no feasibility study was conducted on the project itself, it will be difficult to proceed with the project as it is. We need to go back to the beginning and start with a feasibility study, so it is expected to take time to decide whether to resume the project.”

He added, “For those involved who were found to have handled work inappropriately or negligently, internal measures will be taken along with consideration of applying legal violations, and for serious misconduct, relevant regulations will be applied and investigation requests will be made in early January.”

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