In February, a fire broke out at the construction site of the Banyan Tree Haeundae Busan resort complex in the Osiria Tourist Complex, Gijang County, Busan, resulting in the deaths of six people. A police investigation has revealed that the incident was rooted in permit-related corruption involving the project developer, the supervisory firm, local government officials, and fire department personnel.
A joint investigation is underway at the fire site of the Banyan Tree Haeundae Busan construction near Orangdae Park in Osiria Tourist Complex, Gijang County, Busan, in February. Photo by Yonhap News
The Busan Metropolitan Police Agency's Criminal Investigation Unit announced on May 8 that a total of 31 individuals?including officials from the project developer, construction company, supervisory firm, Gijang County Office, and Gijang Fire Station?have been criminally charged with violations of the Building Act, the Fire Facilities Construction Act, the Act on the Aggravated Punishment of Specific Crimes (bribery offering and acceptance), falsification and use of official electronic records, and obstruction of official duties by fraudulent means. Among them, the head of the project developer and the fire supervision manager have been arrested.
According to the police, at the time of the incident, construction progress was only about 91 percent complete. However, the project developer and the construction company pushed for premature approval for use in order to avoid a daily penalty of 290 million won and to meet the completion deadline required by a 325 billion won project financing (PF) loan agreement. In this process, they coerced and pressured the supervisory firm and the fire supervision manager. The investigation also found that the fire supervision manager was given 30 million won and promised additional compensation worth 100 million won.
The project developer had entered into a PF loan agreement worth several hundred billion won with 14 major lenders, with the condition that construction be completed by November 27, 2024. As a result, the resort had to be finished and receive use approval from Gijang County, the licensing authority, by that date. Failure to do so would have required immediate repayment of the entire remaining debt, in addition to the daily penalty of 290 million won.
The supervisory firm submitted a completion report falsely stating that construction was finished, and the architect acting as an agent prepared an inspection report claiming the site was suitable for use without conducting an on-site inspection. Officials from Gijang County Office and the fire department processed the use approval based on these false documents without conducting their own site verification.
The police also confirmed that, just before the use approval was finalized, there was a three-way meeting involving the project developer, the architect, and government officials. In addition, the investigation revealed that the project developer provided luxury hotel meal vouchers to county and fire department officials, some of which were actually used.
The police have determined that this illegal use approval constitutes a serious crime that threatens public safety and the lives of citizens. Accordingly, those involved have been criminally charged with falsification and use of official electronic records and obstruction of official duties by fraudulent means.
In connection with this case, a total of 31 individuals?including those from the supervisory firm, construction company, and government offices?will be referred to the prosecution. In addition, six people, including Park Jungo, chairman of Samjeong Enterprise, the construction company, were already arrested last month on charges of violating the Serious Accidents Punishment Act.
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