Litigation Escalates to 'Criminal Charges'?‥ Conflict Over 'Ilsan Bridge Toll Removal' Continues

Goyang City Requests Investigation into Former and Current Executives of Ilsan Daegyo Co., Ltd. for "Intentional Loss Causing and Excessive Labor Cost Payments"

Mayor Lee Jae-jun of Goyang City is making a statement regarding the toll-free policy of Ilsan Bridge [Goyang City]

[Asia Economy Reporter Ra Young-cheol] Goyang City in Gyeonggi Province has requested a police investigation into six current and former CEOs of Ilsan Bridge Co., Ltd. on charges including breach of fiduciary duty.

According to Goyang City's claim on the 23rd, the breach of fiduciary duty by the current and former CEOs of Ilsan Bridge Co., Ltd. involves intentional losses caused by high-interest loan contracts at rates comparable to private loans and excessive payment of labor costs.

A city official stated, "Ilsan Bridge Co., Ltd., despite being effectively one entity (special related parties) with its major shareholder, the National Pension Service, entered into loan contracts with each other at an interest rate of 20%, which is ten times higher than the market rate."

He continued, "For over the past ten years, more than half of the toll revenue was paid to the National Pension Service as interest, deliberately causing losses to Ilsan Bridge Co., Ltd. and generating enormous profits for the National Pension Service," adding, "Using deficits as an excuse, receiving loss compensation funds from Gyeonggi Province, and even avoiding corporate taxes constitute a clear breach of fiduciary duty as the operator of Ilsan Bridge."

Regarding excessive labor costs, Ilsan Bridge operates with 54 personnel over a total length of 1.8 km, which is considered excessively high compared to the average total personnel of 5.1 persons/km for private toll roads and 3.2 persons/km for publicly funded roads.

The city judged that Ilsan Bridge Co., Ltd. caused toll increases due to inefficient operations, including labor costs.

Mayor Lee Jae-jun of Goyang City said, "Ilsan Bridge Co., Ltd. ignored recommendations to improve the profit structure and refinance funds and refused to come to the negotiation table," adding, "While respecting the court's decision, we will definitely uncover the breach of fiduciary duty related to Ilsan Bridge Co., Ltd. and realize permanent toll-free usage."

The main lawsuit regarding the public interest disposition to cancel the business designation is currently underway, and the city plans to take strong measures against violations of the Fair Trade Act if no agreement is reached between the parties.

Meanwhile, Gyeonggi Province canceled the operating rights of Ilsan Bridge Co., Ltd. last month and issued a "public interest disposition" that provides corresponding compensation, making tolls free from the 27th of the same month.

In response, Ilsan Bridge Co., Ltd. filed for a suspension of execution and a lawsuit to cancel the disposition, and the court accepted the suspension application, resuming toll collection about 20 days later.