Korean contractors fined for bid-rigging

By Chris Sleight13 May 2015

The Korean Fair Trade Commission (FTC) has announced fines totalling KRW 175 billion (US$ 160 million) for 22 contractors it found to have colluded on nationwide gas pipeline construction projects.

Those sanctioned included Doosan Heavy Industries, GS E&C, Hanwha E&C, Hanyang Construction, Hyundai E&C, Hyundai Heavy Industries, POSCO Engineering, Samsung C&T, Sambo Construction and SK E&C. The highest fine was KRW 36.2 billion (US$ 33 million) for Hyundai E&C. The value of contracts they and others are said to have colluded over was put at KRW 1.7 trillion (US$ 1.5 billion) by the FTC.

According to the FTC, the companies colluded on the bidding for 27 pipeline projects in 2009, 2011 and 2012. Illegal practices are said to have included rigging bids to fix the outcome of the tendering process so a nominated contractor would win the work. Kickbacks from the winner to other contractors in the cartel were said to have been paid.

Three further companies, Dong-Ah Construction, Keangnam Enterprises and Ssangyong E&C were also said to have colluded, but were not fined by the FTC due to pre-existing financial difficulties. Keangnam Enterprises is in receivership following the suicide of its chairman, Sung Woan-Jong last month in the wake of a bribery scandal.

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