[Exclusive] Daebang Construction's "Swarm Bidding Land Resale," Prosecutors Say "Undermines Fair Competition in Construction Market"

After the Fair Trade Commission Imposed 20 Billion KRW in Fines, Case Referred to Prosecution
Prosecutors: "Concerns Over Acts Hindering Fair Competition in the Construction Market"

The prosecution indicted Koo Chan-woo, CEO of Daebang Construction, and Daebang Construction Corporation on charges of securing prime public land through 'swarm bidding' and reselling it to affiliated companies for family benefits. The indictment stated that they "engaged in acts that unfairly supported (affiliated companies), thereby potentially hindering fair trade in the domestic housing development and construction market."

According to the indictment submitted by the Ministry of Justice to the National Assembly on the 17th, CEO Koo, through the 'Land Business Feasibility Review Meeting,' had Daebang Construction participate in the bidding and won the bid on April 18, 2014, for the 'K Commercial Land' public site supplied by Seoul Housing and Communities Corporation (SH). On November 19 of the same year, the land was resold to Daebang Industrial Development. From then until March 25, 2020, the housing construction business opportunities for five public land sites were transferred to affiliated companies in the form of public land resale using the same method.

According to the list of crimes attached to the indictment, the public lands in question include commercial land in the Magok Urban Development District bid by SH (resale amount 34.6 billion KRW), two residential land sites in Jeonnam Innovation City allocated by lottery by LH (18.9 billion KRW and 10.5 billion KRW), residential land in Chungnam Naepo New City supplied by LH as a form of land compensation (32.5 billion KRW), residential land in Chungnam Naepo New City supplied by Chungnam Development Corporation through lottery (33.9 billion KRW), and commercial land in Hwaseong Dongtan 2 District bid by Gyeonggi Province Corporation (76.9 billion KRW).

The prosecution stated in the indictment, "Daebang Industrial Development, which lacks experience in housing construction projects, and its wholly owned subsidiaries, where Daebang Industrial Development employees are registered as directors and auditors, continuously resold commercially viable public land." Through this, "they planned to build housing construction records and, by acquiring profits generated during the implementation and construction process, grow Daebang Industrial Development and its wholly owned subsidiaries to form, maintain, and strengthen a dominant position in the market," the prosecution judged.

The prosecution wrote in the indictment, "By conducting transactions of considerable scale, sufficient volume was provided to enable Daebang Industrial Development to start and maintain its business during the period, securing liquidity," and "by providing excessive economic benefits and unfairly supporting them, they committed violations that could hinder fair trade in the domestic housing development and construction market."

The Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Kim Yong-sik) raided the offices of Daebang Construction Group affiliates in early March, summoned CEO Koo as a suspect on the 18th for investigation, and indicted him without detention on the 21st. Earlier, on February 25, the Fair Trade Commission imposed fines of 12 billion KRW and 8.5 billion KRW on Daebang Construction and Daebang Industrial Development (including five subsidiaries), respectively, and referred the corporations to the prosecution.