The Ministry of Land, Infrastructure and Transport said on the 26th it had asked police to investigate Dawonsys, a domestic railcar manufacturer that has been delaying train deliveries by about three years. The move follows President Lee Jae-myung's remark two weeks ago that it seemed "a government agency was scammed."
The Ministry of Land, Infrastructure and Transport (MOLIT) said that, regarding delivery delays for ITX-Maum railcars ordered by KORAIL, it confirmed contract violations by Dawonsys, including using advance payments for purposes other than intended, failing to expand production lines, and lacking necessary materials and parts. Based on MOLIT's legal review, fraud allegations were raised against Dawonsys.
Earlier, KORAIL signed first- and second-round contracts in 2018–2019 to introduce new ITX-Maum trains. Although the delivery deadlines passed by three years for the first contract and two years for the second, 218 out of a total of 358 cars have not been delivered. Nonetheless, in Apr. last year KORAIL signed a third contract with Dawonsys to purchase 116 additional cars, but even the preliminary design for production has not been completed to date.
The MOLIT investigation found that Dawonsys used part of the advance payments from the first and second contracts for purposes unrelated to manufacturing the ITX-Maum railcars. Dawonsys spent part of the funds to purchase parts for general electric multiple units. Advance payments must be used only to perform the relevant contract, but of the 245.7 billion won received as an advance under the second contract, Dawonsys used 105.9 billion won to build vehicles under the first contract.
Dawonsys also temporarily increased its delivery volume in Apr. last year, just before signing the third contract. While Dawonsys had been delivering four cars per month that year, it delivered 12 cars only in Apr. last year. Even that stopped after the third contract was signed. Dawonsys said it would expand production lines when it signed the third contract, but it has taken no action on this to date.
MOLIT said, "There are limits to investigating areas beyond our audit authority, so the truth must be established through an investigation by law enforcement," adding, "We will take stern action against illegal or improper handling of duties by KORAIL, the ordering entity, as well as by Dawonsys."