Forestry Cooperative Federation Wins 'Landslide-Prone Area Survey' Bid by Using Acquaintance Companies as Fronts

Fair Trade Commission Imposes Corrective Order and 275 Million KRW in Fines

[Sejong=Asia Economy Reporter Joo Sang-don] The Korea Forest Service has sanctioned the Korea Federation of Forest Cooperatives for rigging bids by using affiliated companies as fronts in the tender for a landslide-prone area survey project.

On the 30th, the Fair Trade Commission (FTC) announced that it decided to issue corrective orders and impose a total fine of 275 million KRW on four businesses, including the Korea Federation of Forest Cooperatives, which colluded on bid amounts and designated front companies while participating in six tenders for landslide-prone area surveys (with a total contract value of 12.7 billion KRW).

According to the FTC, the Korea Federation of Forest Cooperatives, Nexgeo, NanoGeo ENC, and Poem colluded in six tenders conducted by the Public Procurement Service from March 2013 to April 2018 for landslide-prone area survey projects.

The Korea Federation of Forest Cooperatives recruited companies where their acquaintances worked to participate as fronts in the bids. To facilitate participation, they assisted or even wrote proposals on behalf of these front companies. Furthermore, to ensure stable winning bids and profits, they pre-informed the front companies of their bid amounts via phone calls or text messages or directly designated the amounts the front companies should bid, requesting bids favorable to themselves. As a result, the Korea Federation of Forest Cooperatives won all six tenders as intended and signed contracts.

Accordingly, the FTC decided to issue corrective orders to all four businesses involved in the collusion and impose a fine of 275 million KRW on the Korea Federation of Forest Cooperatives. The other three businesses were not fined considering their lack of awareness of illegality, personal relationships with the responsible persons, and absence of unjust gains.

An FTC official stated, "This action is significant in detecting and sanctioning long-term (2013?2018) secret bid rigging in the landslide-prone area survey tender market commissioned by the Korea Forest Service." The official added, "The FTC will continue to closely monitor public tenders to prevent collusion and will take stricter measures through swift investigations if signs of collusion are found, especially in bids related to public safety and citizens' lives."