ACRC draws up measures to enhance effectiveness of penalties to construction companies that have provided bribes

Major Items to Improve Institutions

• Measures to impose practical penalties--suspension of business--to corrupt construction companies that have provided money and goods
  - Penalties will be reinforced to impose "suspension of business" to construction companies even for bribes that their executives and employee have provided to turnkey consultation commissioners.
  - Construction companies that have been imposed surcharge by the Korea Fair Trade Commission for participating in rigged bids should be prohibited from participating in bids by all public organizations.
  
• Enhance effectiveness of penalties to all corrupt companies as "unfair businesses"
  - Companies that have been found to provide bribes either to state, municipalities or local public corporations, should be prohibited from participating in bids by all public organizations.

The Anti-Corruption and Civil Rights Commission (ACRC) drew up measures to impose administrative penalties in a practical sense, e.g. suspension of business activities and limitations on participation in bids, to corrupt companies that have provided bribes in relation to turnkey consultation and rigged bids, and recommended them to the relevant government departments.

Under the suggested measures, penalties will be reinforced to executives and employees of construction companies that have provided evaluation commissioners with money, goods and treats. Accordingly, construction companies can be "suspended for business."

Construction companies that have been imposed surcharge from the Korea Fair Trade Commission for rigged bids, are prohibited from participating in bids placed by public organizations.

In addition, the institution will be improved to "ban all corrupt companies from participating in bids by public organizations" that have been found to provide money, goods and treats to any organization--state, municipalities or public organizations.

Measures drawn by the ACRC to reform major institutions after having researched on the actual conditions and holding public hearings include:

1. Enhance effectiveness of suspension of business for construction companies that have provided bribes

Problems

Big construction companies used to mobilize all executives and employees in lobbying evaluation commissioners with all means available, but when it is disclosed, they consider it a matter of personal corruption and attempt to avoid the penalty of "suspension of business" by filing a lawsuit.

* When professor A of B university made a declaration of conscience about receipt of bribes in the construction of the complex community center at new city x, construction company y argued that the event was a personal corruption where only executives and employees were involved.

The court did not consider evaluation commissioners who received bribes from executives and employees of construction companies as "the ordering body"s employee*" and the construction companies were not imposed any penalty.

* "The ordering body's employee" refer to those who have concluded a formal employment contract with the ordering body and are under control of the ordering body or those who are under control or supervision of the ordering body in carrying out tasks. But the evaluation commissioner was not considered as "the ordering body's employee" by the court because the commissioner participated in the evaluation using his or her expertise, apart from the opinion of the ordering body.

The court does not impose the suspension of business to construction companies because companies can not take the responsibility of appointing and supervising bribes provided by "other employees," i.e. employees other than executives.

Solutions

Detailed information about those who provide and receive bribes, e.g. the ordering body"s employee, other employees

2. Reinforce restriction on participation in bids by construction companies that have rigged bids

Problems

Construction companies that have participated in rigged bids are afraid of "penalties as unfair businesses" and attempt to avoid administrative penalties by filing a lawsuit. Insufficient penalties—registered at G2B—are imposed on construction companies that have been imposed surcharge from the Korea Fair Trade Commission.

Solutions

Government agencies, including the Public Procurement Service should reinforce follow-up measures against unfair businesses—registered at G2B—when making decisions on surcharge for rigged bids.

3. Enhance effectiveness of penalties to corrupt companies as unfair businesses that have provided bribes

Problems

When companies have been involved in rigged bids by public corporations and local public corporations except 14 public corporations*, they are limited from participating in bids by the relevant organization only, showing poor effectiveness.

Solutions

All corrupt companies that have provided bribes in relation to all public contracts, including construction, services and purchase, should be limited from participating in bids by all public organizations.