Conflict Over Seongan Hapsem Demolition in Gumi Intensifies... Allegations of Double Contracts and Organized Crime Involvement

Company A Claims "Contract Deposit," Alco Insists "Loan"
On-Site Standoff Amid Dispute Over the Truth
Allegations of Organized Crime Involvement
Police Investigate Key Figures Entering the Site

The conflict surrounding the demolition project at the Seongan Hapsem site within the Gumi National Industrial Complex in North Gyeongsang Province is intensifying.

Allegations of double contracts and suspicions of organized crime involvement have emerged, escalating the issue from a simple contractual dispute to a crisis that threatens the overall trust in the local industrial ecosystem.

Gumi Seongan Hapseom

In July of last year, the Chinese-owned company Malcolm International (CEO Ju Gyeommok) acquired the site for 41.7 billion won through a bidding process. To push the project forward, Malcolm International established a special purpose company, Alco Co., Ltd., and has been proceeding with demolition and new factory construction.

Company A claims, "After signing a demolition contract with Malcolm International in November last year, we re-signed with Alco on April 3 this year. The previously paid 1.2 billion won was converted into the demolition contract deposit through discussions with Alco."

In response, Alco stated, "The contract signed with Company A in November last year was a direct contract with Malcolm International and has no legal validity. The 1.2 billion won paid was not a demolition contract deposit but a simple loan."

However, Company A insists, "The amount was converted into a contract deposit after multiple discussions. If it were a loan, there should be a loan certificate or notarized documentation, but no such documents have ever been presented."

In fact, it is known that on April 4, the day after signing the contract with Company A, Alco selected Company B as the preferred negotiation partner. Two months later, on June 13, Alco signed a demolition contract with Company B after receiving a 2 billion won deposit.

In front of the Gumi Seongan Hapssum headquarters, several demolition company officials are holding a rally claiming 'double contract damage.'

Company A has filed criminal charges against Alco, the broker, and three others, claiming that it was unilaterally excluded from the site without being able to start construction due to breach of contract. Company A also stated it had already paid 280 million won as an introduction fee for the demolition project and suffered losses amounting to several billion won.

The situation is expanding beyond a civil dispute into a criminal conflict. Company A claims, "Company B brought in organized crime members from the Incheon area to the site to threaten us."

Regarding this, a police official stated, "We have secured video footage and witness statements related to the involvement of organized crime, and have also detected evidence that a key member of the organization entered the demolition site."

The official added, "If any illegal acts are confirmed, all those involved will be dealt with swiftly and strictly."

This site is a key industrial location where Alco has signed a memorandum of understanding for investment attraction with Gumi City, presenting a plan to invest a total of 200 billion won in an aluminum rolling plant. Based on this, Gumi City received the '2024 Gyeongsangbuk-do Investment Attraction Award.'

Alco plans to build four first-phase rolling lines by 2027 and complete a total of 20 production lines by 2030. However, there are concerns that if the current demolition conflict continues for a long time, not only the credibility of the project but also confidence in Gumi City's industrial attraction achievements could be undermined.

The local construction industry is protesting, stating, "It is unacceptable for a foreign company to unilaterally ignore contracts with local companies and transfer rights under the pretext of large-scale investment."

An official from Gumi City said, "Although this is a contractual issue between private parties, it is directly linked to trust in the local industry, so we are closely monitoring the situation." The official also stated, "We are thoroughly reviewing the legal issues and both parties' positions, and will consider administrative mediation if necessary."