The government conducted a full inspection of construction sites in the greater Seoul area identified with the help of artificial intelligence (AI) technology and other tools, uncovering 29 violations including illegal subcontracting. During the process, it also prompted the normal payment of 125.8 million won in overdue payments.
The Ministry of Land, Infrastructure and Transport said on the 10th that it carried out an intensive on-site investigation from May 11 to 29 targeting 75 suspected sites in Seoul, Gyeonggi and Incheon to establish fair transaction order at construction sites and resolve wage and payment arrears. The investigation confirmed 29 illegal subcontracting cases committed by 26 companies at 18 sites, and also cleared 11 cases of overdue construction equipment lending fees totaling 125.8 million won.
The joint crackdown was led by the "public-private task force to resolve construction site arrears," headed by the Ministry of Land, Infrastructure and Transport (MOLIT) First Vice Minister as Director General. It focused on 63 suspected business sites shortlisted through AI analysis and 12 sites where nonpayment had already been reported. The inspection mobilized joint teams from the Ministry of Land, Infrastructure and Transport headquarters and local land management offices, along with specialists from the Korea Construction Equipment Association.
By type, the most common violation was assigning work to unregistered companies without licenses, with 20 cases. This was followed by four cases of illegal subcontracting to companies that did not meet trade-specific qualification requirements, and five cases of violating re-subcontracting limits by subcontracting again without meeting legal requirements. In addition, a raft of other violations was uncovered, including unregistered or unqualified construction, failure to notify authorities of subcontract terms, and failure to issue payment guarantees for machine lending fees.
In particular, regarding unpaid equipment lending fees, blocked payments were completed at eight of the 12 business sites where reports were filed. The remaining unresolved cases are currently in litigation or undergoing relief procedures through mutual aid associations.
Major cases revealed during the crackdown include A Construction, the prime contractor at an officetel site in Gwangjin District, Seoul, which illegally passed on work to an unlicensed fence installation company. B General Construction was also caught in Pyeongtaek, Gyeonggi Province, for assigning masonry work requiring specialized qualifications such as painting or waterproofing to an unregistered company at neighborhood living facilities and multi-family housing sites.
There were also a series of expedient contracts that ignored qualification requirements. C Construction, in charge of a promotion hall project in Seongdong District, Seoul, handed over the entire exterior temporary works to a company that only had an interior construction license and lacked licenses for structure demolition or scaffolding. D Construction was also found to have illegally assigned scaffolding work to a company that only held a rebar and concrete license at a complex facility site in Gangdong District, Seoul.
Schemes violating re-subcontracting restrictions were also caught. At a street housing maintenance project site, subcontractor E handed over panel installation work to another company without the client's approval. They tried to evade the crackdown by disguising it as a simple materials supply contract, but the inclusion of labor costs and on-site installation terms in the contract led to the determination that it was effectively an illegal re-subcontract. At another multifamily housing site, a subcontractor was also caught re-subcontracting ground reinforcement work to a third-party technical firm without the client's consent. In the process, the agreements they signed and the issued tax invoices were secured as evidence.
The Ministry of Land, Infrastructure and Transport plans to request administrative measures such as business suspensions or penalty surcharges from the relevant local governments for the illegal acts uncovered in this inspection. At the same time, it will proceed with criminal procedures through police complaints.
In addition, the investigation will be expanded to other construction sites where the companies involved in the illegal acts are participating, to comb through for similar violations. For habitual or large-scale malicious illegal subcontracting, a legal revision is being pursued so that the Minister of Land, Infrastructure and Transport can impose strong sanctions directly. A draft amendment to the Enforcement Decree of the Construction Industry Framework Act containing the relevant provisions is currently preannounced for legislation.
Kim Ei-tak, the Ministry of Land, Infrastructure and Transport (MOLIT) First Vice Minister, said, "Payment arrears at construction sites directly harm construction equipment lending businesses and on-site workers," adding, "We will continue to strengthen regular inspections focusing on sites with arrears reports and suspected illegal subcontracting, and will take strict action on identified violations."