Company That Invested 9 Billion Won: "Deceptive Administration That Broke Administrative Trust... Filed State Compensation Lawsuit"
Claims have been raised that Boryeong City in South Chungcheong Province reneged on its subsidy promise made to attract businesses, effectively 'deceiving' a company that invested billions of won.
The incident is expected to cause significant repercussions in the local industrial ecosystem, as investment attraction based on administrative trust has instead resulted in harm to the company.
According to an Asia Economy report on October 9, a company (referred to as Company A) that manufactures, processes, and exports dried seafood in Seoul invested 9 billion won in 2021, trusting Boryeong City's commitment. However, the company filed a state compensation lawsuit in June this year, claiming that the city failed to fulfill its promise.
Company A stated, "Boryeong City encouraged us to move into the Ungcheon General Industrial Complex (Ungcheon Industrial Complex), promising to provide subsidies covering 30% of the land purchase cost and 14% of the facility investment cost. Relying on this, we purchased land and built a factory, but the city later reduced the subsidy rates."
According to the company, when the factory was 70% complete, the city refused to pay about 736 million won in subsidies, citing that it did not meet the legal payment criteria.
The company argued, "Reneging on the promise due to financial burden is a clear act of deception and a case where the city itself has undermined administrative trust," and submitted to the court recordings of phone calls with the responsible official at the time, city promotional materials, and the subsidy application form.
These materials reportedly include an audio file in which a Boryeong City official explicitly mentions '30% support for land purchase and 14% for facilities,' as well as promotional content with the same wording on the city's official blog.
The company's attorney, in an application to amend the grounds for the claim, emphasized, "Boryeong City, under fiscal pressure due to sluggish sales at Ungcheon Industrial Complex, aggressively attracted companies and then evaded responsibility. This is a direct violation of the administrative duty of good faith and the principle of protection of trust."
In response, a city official explained, "The subsidy rates were calculated within the scope set by national and provincial subsidy standards, and a definite payment was never promised. There are no procedural issues in the administration."
The official added, "The case is currently in litigation, and we will await the court's decision."
Regarding this, there has been criticism in the local community, with some saying, "If the city lures companies in to boost sales figures and then backs out after investment by citing legal regulations, who would invest in Boryeong?"
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
