Illegal Subcontracting Rampant at Construction Sites
On the afternoon of the 16th, the sixth day since the collapse of a newly built apartment in Gwangju, rescue workers are conducting rescue operations. One of the most fundamental causes of poor construction quality at construction sites, 'illegal subcontracting,' is increasingly being revealed in the Gwangju Hwajeong I-Park apartment construction project.
The Gwangju Hwajeong I-Park collapse accident occurred on the afternoon of the 11th at around 3:46 PM while pouring concrete on the 39th floor, the top floor.
◆Suspicion that equipment rental company B poured concrete instead of company A, which contracted for concrete pouring= According to the construction industry on the 16th, the concrete pouring work at the Gwangju Hwajeong I-Park project was contracted by a specialized construction company, company A, with HDC Hyundai Development Company.
At the time of the collapse, eight workers were performing the pouring work, all of whom were confirmed to be employees of equipment rental company B, not company A. Company B is a company equipped with a pump car that lifts concrete brought in by ready-mix concrete to the upper floors and had a rental contract to lend equipment to company A. In principle, company B should only transport concrete to the upper floors using the equipment, and the pouring should be done directly by company A, which has the expertise as the structural contractor.
However, since company B was entrusted with both transporting and pouring the concrete, company B's employees effectively performed so-called 'proxy construction.' Even if this is not legally illegal subcontracting, it practically represents a typical subcontracting structure of primary contractor → subcontractor → sub-subcontractor.
The police, who have already conducted a seizure and search of the company, plan to investigate the legality of illegal subcontracting through statements from related parties and analysis of seized materials.
Building collapse accidents usually occur due to a combination of factors such as illegal design or structural changes, illegal subcontracting or sub-subcontracting, negligence in site management, and failure to comply with safety regulations.
The construction industry regards illegal subcontracting practices as the most fundamental cause of poor construction quality among these factors. Therefore, although sub-subcontracting is strictly prohibited by law, the construction industry says such practices have been carried out as a matter of routine.
Illegal subcontracting was also revealed in connection with the collapse disaster of the demolition building in the Hakdong 4 District redevelopment in Dong-gu, Gwangju, which occurred in June last year.
The contractor, HDC Hyundai Development Company, signed a contract with the association for 5 billion KRW for general building demolition work and subcontracted it to Hansol Enterprise in Seoul. Subsequently, Hansol and Daewon ENC made a side agreement to split the construction cost 70:30, and then illegally subcontracted again to Baeksol Construction in the Gwangju area, according to investigative authorities.
As a result, the demolition construction cost at the redevelopment site reportedly decreased from the initial 5 billion KRW to 1.1 billion KRW, and then to 900 million KRW.
On the afternoon of the 16th, the sixth day since the collapse of a newly built apartment in Gwangju, 119 paramedics are conducting rescue operations.
◆Widespread sub-subcontracting at construction sites... government supervision is insufficient= After the Hakdong disaster, the Ministry of Land, Infrastructure and Transport strengthened safety management and conducted a special inspection of 136 public construction sites from November 15 to December 20 last year, resulting in the detection of illegal subcontracting cases at 46 sites (34%).
Among the 46 companies, 43 did not adhere to the principle of direct construction for more than 80% of the contract amount, and the remaining three subcontracted within 20% of the contract amount but did not obtain prior written approval from the client.
Except for a few exceptional cases, the Construction Safety Basic Act, which fundamentally prohibits sub-subcontracting, is not properly observed at the sites.
Usually, subcontractors who receive work from the primary contractor appoint dedicated personnel for sub-subcontracting and are known to undercut the construction cost rates of sub-subcontractors. Consequently, sub-subcontractors struggle to meet construction deadlines with tight budgets, leading to habitual neglect of safety.
However, despite continuous raising of these issues, related system improvements remain formalities and have not led to substantial improvements in actual site conditions.
According to the list of 1,243 workplaces that violated industrial accident prevention obligations announced by the Ministry of Employment and Labor at the end of last year ahead of the enforcement of the Serious Accident Punishment Act on the 27th, the construction industry accounted for 58.9%.
Among 17 workplaces where two or more fatal accidents occurred, 70.6% (12 workplaces) were construction sites.
Although safety accidents continue at construction sites, typically, the general contractors escape responsibility, and penalties are shifted to subcontractor managers.
Regarding the Gwangju Hakdong disaster, 25 people have been booked so far for irregularities in company selection and contracts, but only one person from the primary contractor, Hyundai Development Company, has been booked.
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