Price-fixing charges on US$ 20.5 billion Four Rivers project
By Chris Sleight24 September 2013
The Supreme Prosecutor’s Office in Seoul, South Korea has charged 22 individuals at 11 construction companies with bid rigging on the KRW 22.2 trillion (US$ 20.5 billion) Four Rivers Restoration project. The project was spearheaded by former South Korean president Lee Myung-bak, who was chairman and CEO of Hyundai Engineering & Construction (E&C) in the 1970s and 1980s, one of the accused companies, prior to his 2008 – 2013 term in office.
The other companies implicated are Daelim Industrial, Daewoo E&C, GS E&C, Hyundai Development, Kumho Industrial, POSCO E&C, Samsung Construction & Trading, Samsung Heavy Industries, SK E&C and Ssangyong E&C. The individuals charged are former and current employees of these companies and include former Hyundai E&C CEO Kim Joong-kyum and former Daewoo E&C CEO Seo Jong-uk.
The Four Rivers Restoration project was a scheme to rehabilitate South Korea’s main waterways, the Geum, Han, Nakdong and Yeongsan Rivers, and their tributaries. It was launched in January 2009 and reached completion in October 2011, and was designed to secure water resources for the country, prevent floods, improve water quality and protect river ecosystems. The scheme saw some 929 km of rivers restored and a series of 14 reservoirs constructed.
Prosecutors say that companies colluded to rig bids for individual contracts within the Restoration Project, and that this may have inflated prices by as much as KRW 3.8 trillion (US$ 3.5 billion).
Eight of the contractors involved in the scheme have already been fined by the South Korean Fair Trade Commission for bid rigging on the project.