Payment Withheld After Project Completion... Geonryong Construction Fined 103 Million Won for 'Five Types of Power Abuse'

Failure to Issue Written Contracts and Withholding Advance Payments

Refusal to Provide Guarantees and Pocketing Design Change Fees

A construction company that failed to pay subcontractors after project completion, and blatantly ignored all mandatory obligations under the Subcontracting Act—including issuing written contracts, advance payments, and payment guarantees—has been sanctioned by the Fair Trade Commission.

The Fair Trade Commission announced on July 30 that it has imposed a fine of 103 million won, equivalent to the unpaid subcontracting amount, on Geonryong Construction Co., Ltd. for its unfair subcontracting practices. The company has also been ordered to take corrective action, including payment of outstanding amounts and issuance of prevention orders. Additionally, for the other four violations—including failure to issue written contracts—the Commission issued orders for recurrence prevention.

According to the Fair Trade Commission’s investigation, from March to December 2024, Geonryong Construction Co., Ltd. subcontracted the mechanical equipment portion of the “Yes Gumi Nursing Home Renovation and Expansion Project.” Although the subcontractor had completed the work, Geonryong Construction withheld payment of 103.33 million won in subcontracting fees. This constitutes a violation of Article 13(1) of the Subcontracting Act, which requires payment within 60 days after acceptance of the deliverables.

Abuse of power in the contract process was also confirmed. Between October and December 2024, Geonryong Construction instructed additional work but failed to issue the legally required written contract before work commencement. Despite having received an advance payment from the client, the company did not forward the advance payment of 57.614 million won to the subcontractor as required. The subcontractor provided a contract performance bond, but Geonryong Construction refused to issue a payment guarantee. Even after receiving an increase in the construction fee from the client due to design changes, the company failed to pass on that increase to the subcontractor.

The Fair Trade Commission stated, “We have strictly sanctioned the primary contractor for failing to fulfill even the most basic legal obligations under the Subcontracting Act,” adding, “We will continue to rectify unfair trade practices and strengthen the protection of subcontractors’ rights and interests.”

This content was produced with the assistance of AI translation services.