Criticism is mounting that the system restricting public bidding participation for builders involved in serious accidents has become toothless. Construction companies are buying time by responding to administrative sanctions with injunctions to suspend execution and lawsuits to cancel the administrative dispositions. In fact, when Kumho E&C faced a one-year restriction on participating in bids by public institutions over responsibility for the Osong underpass disaster that left 30 dead or injured, it filed for an injunction, and the court granted it.
According to the construction industry and the Financial Supervisory Service's electronic disclosure system on the 27th, the court granted Kumho E&C's application for an injunction to suspend execution against the "sanction restricting bid eligibility for unscrupulous businesses" notified by the Public Procurement Service. It came four days after Kumho E&C filed, on the 16th, an application for an injunction to suspend the effect of the restriction on bid eligibility and a lawsuit to cancel the administrative disposition. Earlier, the Public Procurement Service had restricted Kumho E&C's eligibility to participate in bids for public works ordered by domestic public institutions for one year from Jan. 23 to Jan. 22, 2027.
Kumho E&C is suspected in the "Osong–Cheongju (section 2) road expansion project" of having its temporary embankment, built during the work, collapse in the heavy rains of July 2023, leading to the Osong disaster. In the accident, 17 vehicles were submerged, leaving 14 dead and 16 injured. The Kumho E&C site manager received a finalized six-year prison sentence at the Supreme Court for occupational negligence resulting in death and injury, and former Kumho E&C CEO Seo Jae-hwan is on trial on charges of violating the Serious Accidents Punishment Act (citizen disaster death).
With the restriction on bid eligibility, Kumho E&C was in a position where it could not participate in new bids for projects ordered by other public institutions as well as the Public Procurement Service. But with the court's decision to suspend execution, it can participate in public works bids for the time being. That is because the restriction on bid eligibility has no effect until one month after the ruling date, the 20th. Kumho E&C is also part of a consortium that participated alone in the rebidding for the site development work of the Gadeokdo New Airport.
Construction companies that receive restrictions on bid eligibility are, almost as a practice, filing applications with the court to suspend the effect, employing a "stalling for time" strategy. If they obtain a suspension of execution, they can continue to participate in public bids until a final Supreme Court ruling. Effectively, builders responsible for major accidents are continuing to participate in public bids for an average of more than two years.
In fact, there have been no cases in the past five years where participation in public bids was actually restricted for builders that had industrial accidents. According to materials on restrictions on public bid participation submitted by the Public Procurement Service to Rep. Park Min-gyu of the Strategy and Finance Committee of the Democratic Party of Korea, from 2021 to last Aug., there were no construction companies restricted from public bid eligibility for violations of the Occupational Safety and Health Act under the National Contracting Act, which governs industrial accidents. During this period, of 244 cases of public bid restrictions on builders, 231 cases (94.7%) were due to failure to perform contracts.
The average approval rate for injunctions to suspend execution filed in opposition to Public Procurement Service sanction dispositions was found to be 90.6%. According to Rep. Ahn Do-geol of the Democratic Party of Korea, from 2019 to the end of Aug. 2024, the number of cases in which the Public Procurement Service sanctioned businesses as unscrupulous was 1,703. Of these, 527 cases filed applications with the court for injunctions to suspend the execution of the unscrupulous-business sanctions in opposition to the Public Procurement Service's dispositions, and 454 of them were granted. In most cases, simply applying allows them to avoid the sanctions.
A representative case is HDC Hyundai Development Company, which received a total 12-month business suspension from the Seoul Metropolitan Government in May last year over the 2022 collapse at the construction site of the I-Park in Hwajeong-dong, Seo District, Gwangju. After receiving the administrative disposition, it filed an administrative lawsuit on the 20th of the same month opposing Seoul's action and also applied for an injunction to suspend execution. The Seoul Administrative Court granted HDC Hyundai Development Company's applications for injunctions to suspend execution against Seoul last June (eight months) and the previous day (four months), respectively. The main administrative lawsuit is in the first trial before the same panel that decided the suspensions, and in the meantime HDC Hyundai Development Company has won, alone or jointly, major projects such as the Yongsan Maintenance Depot front section 1 redevelopment, Mia 9-2 reconstruction, and Sindang 10 redevelopment.
A construction industry official said, "Of course, from the perspective of corporations, being unable to win new orders has a significant negative impact on business activities, so they used lawful response measures to avoid breach of duty." The official added, "Rather than repeating this standardized business suspension and attempts to neutralize it, we need to improve the system, such as substituting with a penalty surcharge, and establish fundamental accident prevention measures."