Gyeongnam Province Disciplines and Reports Responsible Person for Mismanagement Controversy in Robot Land Development Project

Gyeongnam Province, which had vowed to hold accountable those responsible for the Robot Land development project, announced the final audit results related to the project on the 24th.

The Provincial Audit Committee conducted an audit targeting Gyeongnam Province, Changwon City, and the Gyeongnam Robot Land Foundation, focusing on the 2015 amended implementation agreement, management and supervision of the private sector from 2016 to 2019, reasons for the termination of the implementation agreement in 2019, and litigation responses in 2020.

During a briefing, the Audit Committee cited the following as causes for the complete defeat in the lawsuit over the termination of the implementation agreement and claims for payment upon termination: ▲the implementation agreement was amended to be absolutely favorable to the private sector ▲unfair handling of private sector project management and supervision by the province and the foundation ▲Changwon City’s delay in transferring one pension site, providing a pretext for agreement termination ▲omission of important facts and negligent response during litigation.

Bae Jong-gweol, Chairman of the Gyeongnam Provincial Audit Committee, is announcing the final audit results regarding the promotion process of the Robot Land development project.
[Photo by Lee Se-ryeong]

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The Audit Committee revealed that the amended agreement included provisions such as ▲a fixed payment of 100 billion KRW upon termination at the time of completion ▲guaranteeing 100 billion KRW payment even if termination occurs within one year from the start of operation due to the private sector’s fault ▲mandatory provisions for terminating the agreement if the private sector abandons the project.

The committee also pointed out that Gyeongnam Province and the foundation unjustifiably omitted the review and resolution procedures of the Construction Technology Deliberation Committee, which verifies the validity of the detailed design.

They criticized ▲allowing contracts and commencement of private sector construction without design documents ▲conducting the appropriateness review of project costs after commencement instead of before ▲letting the private sector independently correct design issues without the foundation’s verification and confirmation.

They further noted ▲a re-examination of project costs at completion leading to a 2.5 billion KRW increase in construction costs ▲arbitrary exclusion of supervision tasks for spatial production construction worth approximately 24.1 billion KRW out of the foundation’s total construction cost of 78.1 billion KRW ▲and processing completion before construction was finished.

Regarding Changwon City’s transfer of 407 development sites, acquired between 2011 and 2012 at a cost of 33.7 billion KRW, through litigation in 2018, the committee described it as a “lenient lawsuit that overlooked urgency despite the foundation’s request to transfer one pension site between May and September 2019.”

In the lawsuit over payment claims upon termination, the province and foundation were criticized for failing to demand extensions on the private sector’s loan deadlines, ignoring two requests from the main lending agency for loan status plans, and not asserting claims despite knowing that the completion inspection report for spatial production construction was submitted after the completion deadline without supervision.

The committee added that Gyeongnam Province, unaware of these facts due to negligence in supervising the foundation, formed a legal support team composed solely of foundation staff to handle litigation responses.

To prevent recurrence, the Audit Committee announced disciplinary actions against a total of 34 individuals according to the degree of responsibility.

According to the committee, ▲6 individuals received severe disciplinary actions (1 from the province, 1 from Changwon City, 4 from the foundation) ▲9 individuals received minor disciplinary actions (4 from the province, 3 from the city, 2 from the foundation) ▲19 individuals received warnings or were subject to admonition (16 from the province, 1 from the city, 2 from the foundation).

Five foundation members and four private sector individuals are planned to be criminally charged for breach of duty and other allegations.

Decisions regarding disciplinary actions for retired personnel or those whose disciplinary statute of limitations has expired, as well as claims for compensation, will be made based on the results of criminal investigations.

Audit Committee Chairman Bae Jong-gweol stated, “We will take this incident, which caused enormous financial losses and harmed the residents, as a mirror and make every effort at the committee level to prevent a recurrence of such an incident.”

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