Small and midsize company A in North Gyeongsang Province has won government wildfire recovery contracts about 20 times in recent years. The company took part in roughly 300 bids and was found to have set up five shell companies as decoys. It was also was found to have issued fake tax invoices to make it look like companies engaged in internal transactions to meet the performance requirements needed to win government contracts.
On the 3rd, the National Tax Service said it will launch tax audits into 10 of the 5,331 firms that took part in government wildfire recovery projects over the past six years. The firms are suspected of winning government projects through swarming bids using shell companies. They are also suspected of evading about 70 billion won through illegal acts such as issuing fake tax invoices and booking fabricated costs.
According to the National Tax Service, the 10 firms used shell companies to participate in government bids more than 6,500 times and won about 260 of them. The amount they won totals 23 billion won. An NTS official said, "Among these firms, there was a case in which a company transferred its establishment 16 times over five years to evade regional bidding rules."
The tax audits were triggered after President Lee Jae-myung in May pointed to a "wildfire cartel" during a Cabinet meeting. At the time, Lee cited news reports that said shoddy firms created shell companies and monopolized contracts, which was behind the failure to properly carry out wildfire recovery, noting there was a "wildfire cartel." He then said, "Crack down hard."