The Secretariat of the Korea Fair Trade Commission said on the 25th that four builders, including POSCO E&C, violated the Fair Transactions in Subcontracting Act by passing safety costs on to subcontractors. The companies cited for alleged violations are POSCO E&C, KR Industry, Dasan Engineering & Construction, and NC Construction. The Secretariat issued an opinion that all four corporations should be referred to prosecutors. It also said a penalty surcharge should be imposed, though it did not disclose a specific amount. The final level of sanctions is expected to be decided at a forthcoming full commission meeting. The Korea Fair Trade Commission (FTC)'s full commission serves as a court of first instance.
The Secretariat sent review reports applying alleged violations of Article 3-4(1) of the Fair Transactions in Subcontracting Act to the four builders over four months from November last year to this month. A review report is a document in which the Secretariat records the illegality identified during its investigation and its views on measures such as a penalty surcharge, similar to an indictment by prosecutors. The latest review reports followed a Korea Fair Trade Commission (FTC) probe launched after five people died at a POSCO E&C worksite last year.
According to the Secretariat, POSCO E&C, when commissioning construction work to subcontractors, set special terms stating that ▲ after construction equipment enters the site, the cost of installing protective devices such as rear cameras cannot be settled from safety management expenses ▲ if the preemptive management system for unsafe acts such as falls and collisions is not observed, any resulting safety accidents are the responsibility of the subcontractor.
The other three companies set special terms requiring the subcontractor to bear all expenses, including compensation, and to assume civil and criminal liability in the event of a safety accident. The Secretariat determined that they established agreements that unfairly shift safety management expenses, which the prime contractor must bear, onto the subcontractor. The penalty surcharge for violations of the Fair Transactions in Subcontracting Act can be imposed up to a maximum of 2 billion won depending on the degree of severity.
The Korea Fair Trade Commission (FTC) Secretariat said it "plans to determine whether there was a violation of the Fair Transactions in Subcontracting Act (at the full commission meeting) after ensuring the four builders have a sufficient right to defense," adding it "will conduct ex officio inspections on companies with frequent industrial accidents on a regular basis."