Eight Samsung C&T Officials Indicted for Inflating Budget of 'Gageodo Project'

Former and current executives of Samsung C&T and a design supervision company have been indicted for allegedly inflating construction costs by 15.7 billion KRW during the Gageodo breakwater project, thereby embezzling national funds.

On the 18th, the Criminal Division 4 of the Seoul Southern District Prosecutors' Office (Chief Prosecutor Jo Man-rae) announced that four former and current executives of Samsung C&T and four former and current executives of the design supervision company were non-detained indicted on charges of violating the Act on the Aggravated Punishment of Specific Economic Crimes (fraud) and obstruction of official duties by deception.

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After receiving the case from the Coast Guard in August 2020, the prosecution uncovered evidence during supplementary investigations that executives from the construction company and the design supervision company conspired to plan and execute the crime. Previously, from July to December last year, the prosecution conducted raids on four companies, including Samsung C&T headquarters.

According to the prosecution, around March 2016, Samsung C&T claimed the necessity of ground improvement work (the second phase of construction) during the Gageodo Port typhoon damage restoration project (including large-scale breakwater construction). They organized a special task force called the 'Gageodo TF Team' solely for the second phase and operated a joint office with the design company, conspiring in advance to prepare design documents that inflated the construction costs beyond the budget allocated by the Ministry of Strategy and Finance.

Exploiting the fact that the construction cost is determined based on the cost calculation details in the design documents, they inflated the construction cost from 19 billion KRW to 34.7 billion KRW by arbitrarily changing the number of workdays, falsely applying standard unit prices, excessively accounting for barge rental fees and reflecting them in the design, and attaching false comparative estimates during the design document preparation process.

They submitted the fabricated design documents to the ordering agency, Mokpo Regional Maritime Affairs and Fisheries Office, deleting the 'back data' level detailed cost calculation to conceal the illegal facts. Through this, out of the 34.7 billion KRW received as construction payment, only 14.3 billion KRW was actually spent on construction costs, leaving a difference of 20.4 billion KRW.

Based on internal meeting records secured during the raid on Samsung C&T headquarters, the prosecution believes that they committed the crime to compensate for losses incurred during the large-scale breakwater construction (the first phase) that had been ongoing since March 2013.

In December last year, and again in February and April, the prosecution requested arrest warrants for key defendants, but these were repeatedly dismissed.

The prosecution stated, "This is a serious case involving the embezzlement of a large amount of public funds for private gain in a large-scale government contract project. We will make every effort to maintain the prosecution to ensure that appropriate punishment corresponding to the responsibility is carried out through direct supervision by the investigating prosecutors in the future."

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