Economic 'Burden': KDI Warns of Downward Pressure from Construction Sector
Industrial Accident 'Malpractice': President Lee Puts Workplace Safety Failures in the Crosshairs
Crime 'Cover-Up': Sambu Construction and Sehee Construction Expose Ties to Previous Administration
The South Korean construction industry has become trapped in the so-called "three evils" frame: economic burden, industrial accident malpractice, and crime cover-up, plunging it into the worst crisis in its history. The latest statistics on sluggish construction investment indicate that the industry has degenerated into a "burdensome sector" dragging down the nation’s growth rate. President Lee Jaemyung has ordered "the maximum measures within the scope of the law" regarding industrial accidents at construction sites, signaling a crackdown on the entrenched malpractice of poor safety management. In addition, suspicions of crime cover-ups involving previous administrations have emerged, such as with Sambu Construction and Sehee Construction, placing the industry under comprehensive economic, social, and legal pressure.
Economic 'Burden': KDI Warns of Construction-Driven Downward Pressure on the Economy
According to the Korea Development Institute (KDI) on August 15, its recently released economic trends report projected this year’s growth rate at 0.8%, maintaining its previous outlook. The main reason cited was sluggish construction investment. The institute expects the downturn in the construction sector-which accounts for about 15% of the nation’s GDP-to weigh heavily on the Korean economy. KDI revised its forecast for this year’s construction investment growth rate downward by 3.9 percentage points to -8.1%.
Both public and private sector orders have stagnated, and a combination of a private housing supply cliff and project financing (PF) insolvencies has turned the construction industry into a source of overall economic downward pressure. KDI also pointed out that recent measures such as the June 27 policy package, which tightened lending regulations, as well as the new administration’s emphasis on preventing construction site safety accidents, could further impact the sector’s performance. KDI noted, "The contraction in construction investment is also putting a damper on the recovery of private facilities investment and consumption."
Industrial Accident 'Malpractice': President Targets Eradication of Workplace Accident Malpractice
Posco E&C, which was subjected to a search and seizure related to the electrocution accident at the Gwangmyeong City highway construction site on the 12th. Yonhap News.
President Lee Jaemyung has recently targeted major construction firms experiencing a series of fatal industrial accidents, describing workplace deaths as "murder by willful negligence, a form of social homicide," and ordered tough sanctions. President Lee declared a "zero tolerance policy," including license revocations and restrictions on public bidding, and emphasized that this year would mark "the first year of eradicating industrial accident deaths." As a result, the construction sector-which records the highest number of annual workplace fatalities-has become the primary target for rooting out entrenched industrial accident malpractice.
If these tough sanctions are actually enforced, the already struggling construction industry is expected to suffer a severe blow. For example, Posco E&C, which has experienced four fatal accidents at construction sites this year, is already facing weakened financial soundness and deteriorating business prospects, raising concerns that the company could face an existential crisis if strict sanctions materialize.
Fatal accidents at construction sites are frequent and difficult to prevent. Amid such unpredictable circumstances, anxiety is mounting over which company might be the next to face scrutiny after Posco E&C. There are also predictions that the fallout from these industrial accidents will lead to increased safety management costs and longer construction periods, as well as higher construction and sales prices.
Crime 'Cover-Up': Sambu Construction and Sehee Construction Reveal Ties to Previous Administration
First Lady Kim Geonhee is seated wearing the now-controversial 'Van Cleef & Arpels' necklace during the 2022 NATO summit dinner. Photo by Yonhap News
Sambu Construction is accused of issuing a false "Ukraine reconstruction" memorandum of understanding (MOU) to boost its stock price and reaping approximately 37 billion won in illicit gains. During this process, it was discovered that former and current executives shared inside information using political connections, and a message reading "Check Sambu tomorrow" was sent just before the stock price surged. The special prosecution team investigating Kim Geonhee is treating this as a possible violation of the Capital Markets Act and information leakage. Sambu Construction Chairman Lee Iljun and former CEO Lee Eunggeun, both accused of obtaining illicit gains during this process, were indicted for violating the Capital Markets Act. This was the first indictment by the special prosecution team.
Sehee Construction Chairman Lee Bonggwan also directly admitted to giving First Lady Kim Geonhee a Van Cleef & Arpels necklace worth about 60 million won. The special prosecution team is focusing on the fact that, contrary to claims that the necklace worn by Kim was a counterfeit, Sehee Construction kept and submitted the genuine item. This is seen as key evidence supporting the possibility of evidence concealment or manipulation of statements. The special prosecutor is also investigating whether the necklace was provided in exchange for favors, such as a personnel request by Lee’s son-in-law, Park Seonggeun, former Chief of Staff to the Prime Minister.
Meanwhile, Sehee Construction, the top player in the regional housing association (jihutaek) business, has faced its greatest crisis since its founding after the Ministry of Land, Infrastructure and Transport launched a sweeping investigation into illegal activities in the jihutaek sector, following President Lee’s repeated references to the issue before and after his election.
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