Kang Min-guk, People Power Party Lawmaker, "Strong Restrictions Needed on Swarm Bidding"
Photo by Asia Economy
During the Moon Jae-in administration, allegations have been raised that certain construction companies swept up public land plots supplied by the Korea Land and Housing Corporation (LH).
According to the 'LH Public Land Mass Bidding Related Winning Companies Status' data submitted by the Ministry of Land, Infrastructure and Transport and LH to Kang Min-guk, a member of the People Power Party representing Jinju-si Eul, Gyeongnam, on the 29th, five construction companies?Hoban Construction, Daebang Construction, Junghung Construction, Woomi Construction, and Jeil Construction?won 67 out of 178 plots (37%) through so-called 'mass bidding' during the Moon Jae-in government period (2017-2021).
Mass bidding refers to a method of increasing the chances of winning by having numerous disguised affiliated companies participate in the bidding. Public land subscription, which generates hundreds of billions of won in profit per plot, is highly sought after in the construction industry and is often called a 'lottery.' This method abuses the lottery-style bidding system by creating 'paper companies' that exist only on paper to increase the probability of winning.
Looking at the plots won through mass bidding by the five construction companies, ① Hoban Construction won the most with 18 plots (26.8%), followed by ② Woomi Construction with 17 plots (25.3%), ③ Daebang Construction with 14 plots (20.8%), ④ Junghung Construction with 11 plots (16.4%), and ⑤ Jeil Construction with 7 plots (10.4%).
Reviewing the 'Major Findings of Special Inspections on Mass Bidding' conducted by the Ministry of Land, Infrastructure and Transport and LH on a total of 101 companies that won public land plots over the past three years, issues such as ▲ use of the same IP address during land subscription and ▲ mobilization of multiple affiliated companies have been pointed out. The 'use of the same IP address' is presumed to mean that an employee of a construction company applied dozens of times under the names of affiliated companies from a single computer.
The number of affiliates controlled by these five construction companies is ▲ Hoban 36, ▲ Junghung 47, ▲ Daebang 43, ▲ Woomi 41, and ▲ Jeil 19, totaling 186. This number exceeds the 101 companies that won LH public land plots in the past three years.
The growth of these companies has also been remarkable recently. According to the construction industry trend data provided by the Ministry of Land, Infrastructure and Transport, Hoban Construction rose to 13th place in the industry rankings in 2021 (from 32nd in 2012). Junghung Construction surged from 347th in 2012 to 17th last year.
There are concerns that mass bidding is undermining fair competition in the construction market and increasing market inefficiency.
The problem is that the Ministry of Land, Infrastructure and Transport lacks the authority to investigate these mass bidding companies. In the response submitted to Kang’s office, the Ministry stated, "We have only made institutional improvements as we have had no authority to punish or investigate for years."
Assemblyman Kang Min-guk said, "While the Ministry of Land, Infrastructure and Transport has been making only superficial institutional improvements, excusing the lack of authority to punish or investigate for years, these companies have grown infinitely, and the construction market economy has fallen into chaos."
Kang added, "Since LH reported to the Ministry that 81 out of 101 winning companies over the past three years had issues following a special inspection this year, mere formal institutional improvements are not enough. It is necessary to establish definite recurrence prevention measures such as limiting multiple affiliated companies’ mass bidding participation with a 'one company, one plot' rule."
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