Daebang Construction, which unfairly supported transferring 'valuable' public land expected to yield enormous development profits to a company where the chairman's daughter is the major shareholder, will face sanctions from the Fair Trade Commission. Furthermore, the Fair Trade Commission has decided to report Daebang Construction to the prosecution.
On the 25th, the Fair Trade Commission announced that it would impose corrective orders and a total penalty surcharge of 20.56 billion won on Daebang Construction, the entity providing support that violated the Fair Trade Act, and on the supported entities including Daebang Industrial Development, Elium, Elium Development, Elium Housing, DI Development, and DI Construction.
The business group Daebang Construction is led by Chairman Koo Gyo-woon's family. The corporate governance structure is centered around Daebang Construction and Daebang Industrial Development as the representative companies. Among them, Daebang Construction has Koo Chan-woo, the chairman's son, as the major shareholder, while Daebang Industrial Development has Koo Soo-jin, the chairman's daughter, as the major shareholder.
Daebang Construction transferred six public lands, which it and its affiliates secured through methods like 'dumping bids,' to Daebang Industrial Development and its five subsidiaries from November 2014 to March 2020.
The transferred public lands included locations such as Magok in Seoul, Jeonnam Innovation, Dongtan in Hwaseong, and Naepo in Chungnam, which Daebang Construction evaluated as lands with 'abundant development potential and substantial expected profits.' Nevertheless, Daebang Construction itself did not undertake the construction and other duties. Instead, it was investigated that the transfer occurred under the same person's instructions at a time when Daebang Industrial Development was expected to see a decline in performance or was lacking developable lands.
Through this act, Daebang Industrial Development and its five subsidiaries earned 1.6136 trillion won in revenue and 250.1 billion won in profit. This amount accounted for more than 57% of Daebang Industrial Development's total revenues and the entirety of the five subsidiaries' total revenues. As a result, Daebang Industrial Development saw a significant rise in its construction ability evaluation ranking, climbing from 228th in 2014 to 77th last year, greatly strengthening its position in the related market. The five subsidiaries, which previously had no development achievements or revenues, also gained substantial profits.
The acts of violating the law took place before Daebang Construction was designated as a publicly disclosed corporate group (large corporate group) in May 2021. Accordingly, the Fair Trade Commission sanctioned it as an act of unfair support instead of an act of self-dealing by the corporate leader.
Moreover, the Fair Trade Commission decided to report Daebang Construction. Regarding the reason for not reporting the chairman personally, Han Yong-ho, director of the Fair Trade Commission's corporate group monitoring division, noted, "It did not meet the scoring criteria for the same person's indictment," and added, "Furthermore, the decision to report is judged based on whether there was a possibility of recognizing violations of the Fair Trade Act; we found no material indicating that the same person or corporate group recognized it as a violation of the law."
This case was investigated following a survey by the Ministry of Land, Infrastructure and Transport on the bidding practices of construction companies. In this context, Jeil Construction faced sanctions at the end of last year, and investigations into Umi Construction and Jungheung Construction have concluded, with a general meeting expected to be held in the first half of this year to determine the level of sanctions.