Seoul city and Gangnam district will launch a joint inspection of the reconstruction association for THE H Daechi Edelweiss in Daechi-dong, Gangnam-gu, Seoul. The association fell into default after failing to repay 169.2 billion won in project financing (PF) loans. As complaints from association members continued, the city and the district decided to examine whether there are any illegal or improper matters in the association's overall operations, including budget and accounting, contracts, and information disclosure.
On the 21st, according to the maintenance industry, Gangnam-gu plans to conduct a swift inspection of the operating status of the reconstruction association for THE H Daechi Edelweiss (Daechi-dong Gumaeul District 3), with cooperation requested from the Seoul city government.
A Gangnam-gu official said, "As complaints from association members kept being filed, we asked the Seoul city government for a joint swift inspection," and noted, "We plan to conduct the inspection in the second half of this year, and are discussing the specific schedule."
An inspection of the association's operating status is a system in which a local government investigates the overall operations of an association when complaints related to a maintenance project association are repeated. It is divided into a "planned inspection" led by the Seoul city government with participation from the Ministry of Land, Infrastructure and Transport, and a "swift inspection" led by the district office with support from the Seoul city government. This inspection will be conducted as a swift inspection led by Gangnam-gu.
The inspection team will include not only officials from the Seoul city government and Gangnam-gu but also outside experts such as lawyers and accountants. The team will check whether the association's operations; budget and accounting; contract and asset management; information disclosure; and complaint handling have been carried out in accordance with relevant laws and regulations.
The THE H Daechi Edelweiss association is in conflict with the builder Hyundai Engineering & Construction after failing to finalize additional contributions. The association failed to extend the maturity of its 169.2 billion won PF loan, and an event of default (EOD) occurred on the loan. Although the lender group is in a position to demand repayment of principal and interest from the association, the association has reportedly failed to repay the loan.
The association has been pushing to change the management and disposal plan to raise about 150 billion won in additional contributions to cover the shortfall in project costs. However, due to differences among association members, the related agenda items were repeatedly voted down at general meetings. As the finalization of the additional contributions has been delayed, funding for project costs has been disrupted, and the burden of financial costs such as arrears interest continues to grow.
If violations subject to criminal punishment under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents are identified during the joint inspection, an investigation may be requested from investigative authorities. Depending on the severity of the violations, measures such as corrective orders, notification to related agencies, recovery of improperly paid amounts, and administrative guidance may also be taken.