Seoul City Filters Out Phantom Construction Companies at Bidding Stage... 18 Cases Detected

Starting This Month, Enforcement Criteria Expanded to Construction Orders Over 200 Million Won

[Asia Economy Reporter Kim Hyemin] Seoul City announced on the 9th that it has identified 18 disqualified construction companies among those participating in city-commissioned construction project bids.

Since July last year, Seoul City has conducted preliminary inspections on 111 construction companies participating in bids to verify compliance with construction business registration standards.

As a result, numerous cases were found where companies failed to meet the qualifications for technicians or capital requirements, or shared offices jointly. One construction company falsely registered a technician who did not actually work at the company, and another was found during on-site inspections to have two companies sharing an office space separately.

Seoul City is currently imposing administrative sanctions on these companies, including business suspension for up to six months. In particular, if a company borrowed another person's national technical qualification certificate, administrative measures such as deregistration will be enforced.

Currently, there are 12,992 registered construction companies in Seoul, and the Ministry of Land, Infrastructure and Transport estimates that 15% of these are paper companies. Paper companies are established solely to win construction contracts, pursuing profits through unfair subcontracting and are highly likely to engage in illegal activities such as poor-quality construction.

Seoul City announced that after notifying in the bid announcements for city-commissioned projects that inspections on construction company registration standards would be conducted to prevent paper companies from participating in bids, the number of participating companies decreased by 31%.

Starting this month, Seoul City will expand the criteria to include city-commissioned projects worth 200 million KRW or more and intensify crackdowns on paper companies. The inspection targets are construction companies ranked first in eligibility screening for projects with an estimated amount of 200 million KRW or more commissioned by the city headquarters and business offices. If caught, 10 points will be deducted in the eligibility screening, and administrative sanctions such as business suspension will be imposed. The city is also considering establishing a dedicated organization to expand paper company inspections to all projects.

Han Jehyun, Director of the Safety General Office, said, "We will strengthen crackdowns from the bidding stage to eradicate paper companies that cause poor construction quality, safety accidents, and deprive sound construction companies of opportunities, ensuring that opportunities go to healthy companies."