"Cash and Luxury Gifts to Union Members"... Hyundai Engineering & Construction Fined 50 Million Won for Banpo Jugong Reconstruction Corruption [Real Estate AtoZ]

Provided 139 Million Won in Cash and Luxury Bags to Union Members in 2017
Supreme Court: "Urban Renewal Act Also Applies to Joint Project Implementers"
Ninety-Five Hyundai E&C Executives and Partner Company Representatives Fined or Given Suspended S

Hyundai Engineering & Construction has been fined for providing money and valuables to association members during the bidding process for the reconstruction project of Banpo Jugong Complex 1 in Seocho-gu, Seoul.

On September 4, the Supreme Court's Second Division, presided over by Justice Oh Kyungmi, upheld the lower court's ruling that fined Hyundai Engineering & Construction 50 million won for violating the Urban Renewal Act.

Hyundai Engineering & Construction was indicted for providing a total of approximately 139 million won in cash and luxury bags to association members on over 130 occasions in 2017, in order to secure its position as the project executor for the Banpo Jugong Complex 1 reconstruction. The company was also accused of offering 70 million won in moving expenses to attendees of a project briefing session.

In January last year, the court of first instance stated, "Given the influence wielded by contractors in reconstruction projects, corruption by construction companies must be strictly punished," and imposed a fine of 50 million won on Hyundai Engineering & Construction. Three partner companies that were also indicted each received fines of 10 million won. For 95 individuals, including Hyundai Engineering & Construction executives and subcontractor employees, the court handed down fines ranging from 2 million to 10 million won or suspended prison sentences.

The court pointed out, "Promotional activities involving the provision of money or entertainment create conflicts among association members and disrupt market order, ultimately increasing social costs." Hyundai Engineering & Construction argued that, as a "joint project executor," the Urban Renewal Act's prohibition on contractors providing money should not apply to them. However, the court rejected this defense, stating, "Given the legislative intent, joint project executors are also subject to punishment."

However, the proposal to support moving expenses was found not guilty, as there was no legal prohibition at the time. Although Hyundai Engineering & Construction and some partner companies appealed, both the appellate court and the Supreme Court upheld the original verdict, finalizing the ruling.