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[Editorial] Same old trick

LH board’s resignation announcement just a gesture; more problems laid bare

By Korea Herald

Published : Aug. 18, 2023 - 05:31

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The state-run Korea Land and Housing Corp., known as LH, is now in hot water -- again. This time, it is related to a gesture that purportedly aimed to demonstrate LH’s admission to wrongdoings and resolve to take reform measures over the “missing rebar incident.”

Last week, LH announced “all executive directors” had handed in letters of resignation to take responsibility over the cover-up of faulty apartments of which it was in charge.

It turned out that the company accepted only four resignations, and the terms of office for two executive directors have already expired, with the remaining two about to end next month.

No wonder, then, that LH is taking flak for orchestrating a thinly veiled public show to soften public criticisms following the shocking result of the inspection that some apartment complexes it had built using flat slab methods were lacking reinforcement bars, known as rebar.

LH’s shameful practices were not limited to its disastrous self-reform announcement. In April, an apartment complex under construction in Geomdan New Town in Incheon collapsed. It used the very flat slab design that LH adopted.

In its own review report, LH initially announced 15 of 102 apartment complexes were found to lack the required steel reinforcements in concrete slabs. But there were five more complexes having the same problem.

LH said it decided not to add the five to the initial list, claiming they had “minor flaws.” But it is hard to understand that employees of the state-run enterprise had failed to report the five cases. More bewildering is that LH belatedly carried out steel reinforcement repair while reportedly telling residents that it was just apartment painting work.

There is also a fundamental problem with the way LH does business with other companies. LH has given out deals to subcontractor companies, many of which recruited former employees of the state enterprise -- a much-disputed practice that is said to result in collusion and shoddy construction.

The practice was also linked to the missing rebar scandal, as over half of the complexes with rebar problems were supervised by subcontractor companies that hired ex-LH employees. Over the past three years, these companies with former LH employees had won 77 contracts from LH, valued at 230 billion won ($171 million).

Land Minister Won Hee-ryong also accused LH of “questionable contracting” and ordered the state-run firm to halt all subcontractor deals with companies involving former LH employees. Won’s order was belated yet necessary. In fact, other government agencies are required to look into subcontractor deals related to state-run enterprises to check whether there are similar irregularities that threaten to undermine public safety and steal taxpayer money.

Critics, meanwhile, claim that the government must take extensive reform measures for trouble-laden LH. One of the most glaring issues with LH is that it remains reluctant to undertake real self-reform plans, while staging the same old publicity stunt.

For instance, LH was at the center of the high-profile land speculation scandal in 2021, as 11 LH employees were revealed to have reaped huge profits by purchasing land set to be developed. Embarrassingly, some LH employees protested that they are entitled to make such real estate investments, failing to acknowledge the fact that they have direct access to the country’s land development plans in detail -- a special position that some might exploit to take illicit profits with insider information.

At the time, LH announced it would push for “reform” by sacking four executive directors. But as with the latest case, the term of two officials was scheduled to expire in just nine days. LH was also under attack for rewarding the four executives who tendered resignations by rehiring them as in-house professors whose term is two years for an annual salary of around 100 million won.

Considering the repeated failures of LH, the government has to overhaul the state-run enterprise in a drastic way to fix festering problems and ensure transparency. If not, the mix of LH’s poor management and resulting shoddy construction will only result in disasters.