[Asia Economy (Suwon) = Reporter Lee Young-gyu] Gyeonggi Province has filed complaints against two redevelopment associations located in Uijeongbu and Hanam cities for illegal private contracts and improper use of business promotion expenses.
Gyeonggi Province inspected the A redevelopment association in Uijeongbu from April 11 to 15 and the B redevelopment association in Hanam from April 25 to 29, revealing on the 28th that 32 cases of improper business promotion expense execution were detected in Uijeongbu’s A association and 26 cases in Hanam’s B association.
Key findings include that Association A conducted a contract for structural review, which should have been subject to general competitive bidding worth approximately 225 million KRW, through a private contract. According to the current "Act on Maintenance and Improvement of Urban Areas and Dwelling Conditions," specialized construction work for partial facilities of a building can only be privately contracted if the amount is under 100 million KRW, and other services under 50 million KRW. Association B was also found to have privately contracted a total of 460 million KRW (230 million KRW twice).
Notably, both Associations A and B privately contracted additional work with their existing architectural firms for 100 million KRW and 200 million KRW respectively, prompting the province to take action to report this to the respective cities.
The province explained that even if it is efficient to proceed with work by contracting the existing service provider, arbitrarily setting amounts for private contracts with the existing firm can raise suspicions even if there is no corruption within the association’s executive body, and may cause disputes between the executive body and association members.
The province also confirmed that Association A executed the business expenses for the year without obtaining approval from the association general meeting during the redevelopment association’s general meeting. Like government budgets, redevelopment associations must specify detailed annual business expenses in advance and obtain prior approval from the general meeting before execution. In this case, the business expenses should be established for the current year’s expenditures, not for the entire project period.
The province uncovered a case where the former chairman of Association A, who was dismissed, refused to hand over key documents such as contracts and meeting minutes that must be preserved. The province judged this as a serious criminal act that obstructs association operations and harms all members, and ordered the relevant city to file a complaint.
Additionally, the province issued a caution regarding Association A withdrawing as much as 120 million KRW in cash in advance, claiming it would directly pay meeting allowances and other expenses during association operations. Regarding the execution of business promotion expenses, which can be seeds of conflict and lawsuits within the association, Association A used personal cards for expenditures, and Association B failed to record the purpose and counterparties when making payments.
The province also confirmed that Association B paid a total of 4 million KRW over three years as overtime allowances to the chairman and directors without any regulatory basis and ordered full recovery of these payments.
Hong Ji-seon, Director of the Urban Housing Office of Gyeonggi Province, stated, "There are 177 reconstruction or redevelopment projects underway with associations or promotion committees in Gyeonggi Province, involving 150,000 members. We will gradually expand inspections of reconstruction and redevelopment maintenance associations to promote transparent association management, reduce conflicts and lawsuits among members, and encourage smooth project progress and reduction of association operating expenses."
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