Lotte Engineering & Construction fully paid 13.5 billion won in subcontractor payments that had not been made for over two years. This payment was made after the Fair Trade Commission's investigation began.
According to the construction industry on the 20th, Lotte Engineering & Construction recently settled a total of 14.08 billion won, including 13.52 billion won in subcontractor payments for the 'Guui Station East Pole Construction Project' (Jayang 1 District, Guui-Jayang New Town) and 560 million won in interest, to 58 subcontractor companies.
Some subcontractors, who had not received payments for over two years, finally got paid. The Subcontracting Act stipulates that payments should be made within 60 days after the completion of construction. Lotte Engineering & Construction did not make payments even after surpassing this deadline, with delays ranging from a minimum of 40 days to a maximum of 735 days.
The payment delay period was found to be less than 3 months for 34 companies, 3 to 6 months for 15, 6 to 12 months for 7, and over one year for 2 companies. The late payment interest of 560 million won arose in accordance with the legal interest rate (15.5% per annum).
In this regard, the Fair Trade Commission received reports and conducted a field investigation of Lotte Engineering & Construction on charges of violating the Subcontracting Act on the 16th of last month. This was the Fair Trade Commission's first mandatory investigation related to subcontracting transactions since the inauguration of Lee Jae-myung's government.
Lotte Engineering & Construction paid overdue payments to 2 out of 58 companies on the 10th, and completed the payment to the remaining 56 companies by the 15th, which was 30 days after the investigation began. According to the enforcement ordinance of the Subcontracting Act, if payments are made within 30 days after the Fair Trade Commission's investigation starts and voluntary corrections are made, a warning is issued without 'penalty points.'
If a construction company receives penalty points from the Fair Trade Commission above a certain threshold, it faces disadvantages such as restrictions on bidding participation or business suspension.
A representative of Lotte Engineering & Construction said, "We have completed the payment of progress payments, but delays in agreeing on the final construction payment occurred due to differences in the scope of the construction work and excessive loss cost demands from partner companies, leading to some unpaid amounts." He added, "In the spirit of mutual cooperation, we paid the disputed amount in the settlement and ensured that the legal late payment interest was fully paid to avoid any damage."