[Exclusive] Seoul City Decides on GS Construction's '1-Month Business Suspension' Administrative Sanction

Last Year's 'Geomdan New Town Apartment' Accident Related
Disciplinary Action for Poor Quality Management
Safety Inspection Disciplinary Action to Be Concluded in March

The Seoul Metropolitan Government has decided to impose a one-month business suspension administrative sanction on GS Construction in relation to the collapse accident of the underground parking lot at an apartment in Incheon Geomdan New Town that occurred last year.

On the 31st, Seoul City held an internal meeting and decided to impose a one-month business suspension starting from the 1st on GS Construction for its poor quality management.

A senior official from Seoul City explained, "We have decided to first impose the business suspension administrative sanction for the failure to properly manage quality." The city plans to conclude the business suspension sanction related to safety inspections by March after hearing GS Construction's explanation. Previously, the Ministry of Land, Infrastructure and Transport (MOLIT) requested Seoul City to impose business suspension sanctions for two cases: 'insincere quality testing implementation' (one month) and 'insincere safety inspection performance' (one month).

The administrative sanction by Seoul City is carried out independently from MOLIT. If the business suspension sanction is imposed, existing projects can continue, but new projects cannot be won.

In August last year, former Minister Won Hee-ryong of MOLIT unilaterally decided on an eight-month business suspension for GS Construction, but the final decision by the Administrative Sanction Deliberation Committee is still pending. The committee, composed of legal, academic, and construction industry experts, conducted a hearing procedure for GS Construction until the end of last year.

At that time, MOLIT emphasized a 'zero tolerance' policy toward the party responsible for the accident and imposed the highest level of administrative sanction?an eight-month business suspension?for poor construction. After the collapse accident at the Gwangju Hwajeong-dong I-Park apartment, MOLIT revised the Enforcement Decree of the Framework Act on the Construction Industry to allow the Minister of Land, Infrastructure and Transport to handle the level and procedures of administrative sanctions such as business suspension.

Although GS Construction has decided to completely reconstruct the Geomdan apartment, it is known that this is unlikely to be reflected as a mitigation reason in MOLIT’s sanction. The Enforcement Decree of the Framework Act on the Construction Industry specifies that if there is no sanction history for three years, a one-month reduction can be applied. GS Construction is expected to initiate legal procedures such as filing for a provisional injunction to suspend execution and administrative litigation to cancel the sanction as soon as the administrative sanction decisions from MOLIT and Seoul City are announced.

A construction industry official stated, "Considering the difficult situation of the construction industry due to the cooling real estate market and PF crisis, we hope a reasonable conclusion will be reached."