Ministry to launch intensive crackdown on illegal subcontracting from the 12th, inspect 275 public sites

[Financial News] The Ministry of Land, Infrastructure and Transport will conduct an intensive crackdown on illegal subcontracting and run a voluntary reporting period at public construction sites from the 12th through December 31.
The ministry said on the 7th that it will hold a “Kickoff Meeting on Joint Crackdown on Illegal Subcontracting” on the 8th, chaired by First Vice Minister Kim Yi-tak, with the 10 public institutions with the largest construction-project procurement volumes. The participating institutions are Korea Land and Housing Corporation (LH), Korea National Railway, Korea Expressway Corporation, Korea Hydro & Nuclear Power, Korea Water Resources Corporation, Korea Rural Community Corporation, Korea Electric Power Corporation, Korea Gas Corporation, Seoul Housing and Communities Corporation, and Seoul Metro.
The crackdown is intended to raise awareness of illegal subcontracting. It will target 275 public-sector construction sites where illegal subcontracting is suspected or has been reported, identified using artificial intelligence (AI) and other means. At least 130 personnel from the ministry and public institutions will be deployed.
Alongside the joint crackdown, the ministry will link its whistleblower reward system to on-site inspections to encourage reporting. When a report from a site official or a third party is received, it plans to verify the facts and promptly proceed with an on-site inspection and take action. In particular, it revised the reward system last June, easing the requirements for submitting evidence and abolishing the cap on rewards. Accordingly, a report that results in a 1 billion won surcharge for illegal subcontracting may qualify for a reward of up to 300 million won.
Incentives for voluntary reporting will also be introduced. Businesses that report illegal subcontracting on their own during the intensive crackdown period and rectify it within a set period may have their administrative sanctions reduced by up to half. The relevant Enforcement Decree of the Framework Act on the Construction Industry was revised last September and is scheduled to take effect in January next year. As a result, companies that voluntarily report and rectify violations during this period will receive the reduction immediately in administrative proceedings after the law takes effect.
First Vice Minister Kim Yi-tak said, “Illegal subcontracting must be eradicated because it causes not only major industrial accidents and shoddy construction but also wage nonpayment, and public agencies that award contracts must set an example first.” He added, “We will build a system to eradicate the practice in which reporting, crackdowns and voluntary corrections work together, encouraging reporting and enforcement through whistleblower rewards and applying reduced penalties to companies that put things right on their own.”
[email protected] Jeong Gyeong-su Reporter