Board of Audit and Inspection: "LH Negligence and Collusion with Former Officials' Firms Caused the 'Sunsal Apartment' Crisis"

"Korea Land and Housing Corporation Did Not Verify Poor Design"
Former Officials' Firms Provided Gift Certificates and Overseas Golf Trips

The audit results revealed that the collapse accident of the underground parking lot of the apartment complex under construction by Korea Land and Housing Corporation (LH) in Geomdan New Town, Incheon, was mainly caused by LH's negligence in reviewing and supervising structural design, as well as the collusive relationship involving 'preferential treatment of former officials' companies' from LH.

On the 8th, the Board of Audit and Inspection disclosed the results of the audit on LH's preferential treatment of former officials, stating that LH applied the flat slab structure underground parking lot construction method, introduced in 2016, to 102 districts including Geomdan, Incheon. Despite the fact that poor construction could be easily identified by comparing structural guidelines and structural drawings, LH neglected to verify this and was negligent in reviewing and supervising structural design.

It also pointed out that LH failed to adequately communicate the necessity and construction methods of shear reinforcement bars to construction companies without experience in flat slab structure construction, resulting in the importance of shear reinforcement bars being overlooked or the construction methods being unknown at the site. Shear reinforcement bars are rebar installed in slabs to ensure structural safety in flat slab structures where horizontal beams are absent.

Furthermore, it was revealed that architectural offices subcontracted structural design services to unapproved companies and submitted falsified bank deposit statements to LH during this process, yet LH neglected to address this issue.

In particular, the audit revealed extensively that LH had formed widespread collusive and preferential relationships with former officials and other related parties and was negligent in managing and supervising companies run by former officials.

Regarding the public rental housing construction project in Cheongju Jibuk, the LH Chungbuk Regional Headquarters confirmed that the cause of the design change request (an increase of about 1.7 billion KRW) made twice by the construction company was due to errors in the original design, but did not impose penalty points on the design company run by former officials.

In the case of the former officials’ company that supervised four districts including Hwaseong Bibong, a quality excellence notice was issued to the company despite not meeting the issuance requirements.

Additionally, an LH site supervisor received gift certificates worth about 800,000 KRW from a related former officials’ company and failed to report assets including unidentified cash amounting to a total of 45 million KRW. It was also confirmed that the supervisor went on four golf trips to Vietnam and Kazakhstan with representatives of related companies but did not report these facts to their department head.

LH employees are prohibited from receiving any gifts, regardless of whether there is a quid pro quo, in relation to their duties under the 'Act on the Prohibition of Improper Solicitation and Graft' (Improper Solicitation and Graft Act) and the 'LH Employee Code of Conduct.'

The Board of Audit and Inspection explained, "We requested disciplinary action or caution for a total of 24 LH personnel, including 13 related to negligence in reviewing flat slab structural design and supervising construction, and 11 who improperly handled management and supervision of construction and services by failing to impose penalty points or issue quality deficiency notices to former officials’ companies in violation of related regulations." It added, "We requested an investigation by the Supreme Prosecutors’ Office for three architectural office personnel who falsified evidence of subcontract payment or returned subcontract payments, and two current and former LH employees who received gifts from related companies including former officials."