Assemblyman Lee Hyung-seok: "Gwangju City Must Correct Hasty Negotiations on the First Ring Road"

[Asia Economy Honam Reporting Headquarters Reporter Yoon Jamin] Rep. Lee Hyung-seok (Democratic Party of Korea, Gwangju Buk-gu Eul) stated on the 22nd, “The restructuring negotiations conducted by Gwangju Metropolitan City with the project operator of Section 1 of the 2nd Ring Road resulted in a waste of public funds and significant damage to citizen benefits due to the manipulation of brokers.”

He argued that Gwangju City should conduct a full re-investigation of the negotiation process and content and reclaim the operating rights through public interest disposition.

Rep. Lee said, “After analyzing the business restructuring agreement signed in 2016 between Gwangju City and the project operator (Gwangju Ring Road Investment), which is 100% owned by Macquarie Korea Infrastructure Investment (hereinafter Macquarie), the confidential verification report by Chonnam National University Industry-Academic Cooperation Foundation that reviewed the negotiation proposal at the time, and court rulings, it was found that the negotiations were a hasty deal ‘by Macquarie, for Macquarie.’”

He added, “Analysis of the negotiation proposal showed that the investment return rate (9.8%) and the new investment amount, which serves as the base for the city’s financial support, were excessively set,” and “the negotiations were concluded in a way that guaranteed maximum profit to Macquarie, including Gwangju City agreeing to bear the corporate tax burden that should have been borne by the project operator.”

Rep. Lee explained that such negotiations were believed to have been directly and indirectly influenced by a broker, who, at Macquarie’s request, created a negotiation structure ‘by Macquarie, for Macquarie.’

For example, an accounting expert (former Daegu City auditor who led successful negotiations in Daegu), who proposed a 500 billion KRW cost-saving plan to Gwangju City, was excluded from the negotiation team by the broker acting on Macquarie’s request. This broker was sentenced to imprisonment during the first trial at the Gwangju District Court in June.

Despite the hasty negotiations manipulated by the broker severely damaging Gwangju City’s already poor finances and seriously harming citizen benefits, Gwangju City has apparently not made proper efforts to rectify these negotiations over the past four years.

Rep. Lee urged ▲the filing of complaints against Macquarie personnel suspected of illegal lobbying ▲the formation of an objective verification team to reinvestigate the flawed negotiations ▲and the promotion of renegotiations and public interest disposition based on Articles 46 and 47 of the Private Investment in Social Overhead Capital Act.

He emphasized the need for a prompt response, considering that by 2028, when Macquarie’s operating period ends, a total of 1 trillion KRW in public funds and residents’ toll fees?4.9 trillion KRW in taxes and 4.717 trillion KRW in residents’ toll fees?will have been poured into just 5.67 km of Section 1 of the Ring Road.

Rep. Lee stated, “Citizens of Gwangju using the 2nd Ring Road are accumulating dissatisfaction due to the high toll fees,” and added, “The Gwangju City government under the 7th elected mayor should not neglect this issue just because the negotiations were made during the previous mayor’s term but should actively consider ways to rectify the hasty negotiations and reclaim the operating rights.”