[Why&Next] Fallout from Czech Nuclear Plant 'Tampering' Allegations... Whether Talks Were Deliberately Derailed Is Key

Daewoo Engineering & Construction Union Alleges Contract Was Steered to a Particular Builder
Signs of Subcontractor Contacts Before Talks Collapsed... Suspicions of Contractor Selected in Advance
Legal Liability Possible If Bidding Was a Formality or Confidential Information Was Shared

The collapse of contract negotiations for construction of the 27 trillion won Czech Dukovany nuclear power plant project has taken a new turn, with allegations that construction rights are being steered to a particular contractor. The allegations arose after the Daewoo Engineering & Construction labor union accused Korea Hydro & Nuclear Power (KHNP) of deliberately derailing the existing negotiations to hand the construction contract to another major builder. If confirmed, the allegations would inevitably deal a serious blow to the fairness of contracting and the external credibility of a public institution leading a national nuclear power export project. However, it is difficult to conclude that seeking an alternative contractor or making prior contact in preparation for a breakdown in negotiations is illegal in itself. Whether KHNP was involved and whether a particular company had been selected in advance have therefore become the central issues.

At a press conference at the National Assembly on November 9, the Daewoo Engineering & Construction labor union alleged that KHNP had deliberately derailed the existing negotiations to hand the Czech nuclear plant construction contract to a particular major builder. The union said it had received reports that the builder had contacted subcontractors before the negotiations broke down. It also cited as grounds for suspicion the fact that KHNP announced the end of negotiations about 30 minutes after Daewoo Engineering & Construction submitted a revised proposal that would have required it to absorb losses of hundreds of billions of won.

KHNP strongly denied the union's allegation that it had steered the construction contract to a particular builder, calling it "completely groundless and utterly absurd." KHNP said it ended negotiations because it could not narrow differences with the existing consortium over construction costs and contract terms, and that the claim it deliberately derailed the negotiations to hand the contract to a particular builder was untrue.

Some in the nuclear power industry say these circumstances alone are not enough to conclude that negotiations were deliberately derailed or that a particular company received preferential treatment. In large-scale overseas construction projects, a client may consider the possibility of involving another contractor in case negotiations with the existing party fall through as part of project management.

An industry source said, "Negotiations between KHNP and Daewoo Engineering & Construction had been deadlocked for a long time over construction costs and contract terms. KHNP may have needed to consider ways to secure an alternative contractor in case it could not sign a contract with the existing consortium." The source added, "Even if it is confirmed that another builder was preparing to participate in the project before negotiations broke down, it would be difficult to interpret that fact alone as evidence that the company had been selected in advance or that construction rights were improperly transferred."

From a legal standpoint, so-called "tampering" is not inherently illegal. The term refers to one business contacting in advance a party that has an existing contractual relationship with another business, but it is not a distinct legal concept that directly defines illegality in nuclear plant construction contracts. The legal assessment depends on factors such as who made the prior contact, its purpose, and whether it interfered with the contractual relationship.

However, the situation would be different if KHNP had promised in advance to transfer the construction contract to a particular builder or deliberately derailed the existing negotiations to benefit that company. In particular, if KHNP provided the builder with contract information or construction cost estimates that were not shared with other companies, questions could arise over the fairness of the contracting process and whether confidentiality obligations were breached.

KHNP's status as a public institution is also an important factor. The Rules on Contract Affairs of Public Enterprises and Quasi-Governmental Institutions, based on Article 39, Paragraph 3 of the Act on the Management of Public Institutions, govern public enterprises' contracting procedures. Article 7 of the Act on Contracts to Which the State Is a Party stipulates that open competitive bidding is the general rule.

If it is confirmed that a particular builder was selected in advance and a competitive bidding process was conducted only as a formality, the question of whether relevant contracting rules were violated could arise. Furthermore, if KHNP incurred financial losses to provide an unfair benefit to a particular company, it may be worth examining whether occupational breach of trust under Articles 355 and 356 of the Criminal Act was committed.

The key to determining the substance of the allegations is what decisions KHNP made before ending the existing negotiations. Comparing when Daewoo Engineering & Construction's final revised proposal was received, when KHNP decided to end negotiations, and when it began considering alternative contractors could provide clues as to whether the negotiations were deliberately derailed. In particular, if another builder contacted subcontractors, it will be important to determine whether KHNP knew about the contact in advance, provided relevant information, or requested that the contact be made.

In the same vein, the Daewoo Engineering & Construction union's claim that negotiations ended "within 30 minutes" also warrants scrutiny. If the two sides had been unable to narrow their differences during lengthy negotiations, KHNP could have decided to end them quickly after receiving the final revised proposal. On the other hand, if the proposal included significant concessions that reversed Daewoo Engineering & Construction's previous position, but KHNP ended negotiations without a substantive review, questions about the decision-making process would inevitably grow.

Nuclear power experts have taken a cautious view of the possibility that negotiations were deliberately derailed with a particular builder in mind. Moon Juhyun, a professor in the Department of Energy Engineering at Dankook University, said, "In this day and age, deliberately doing something like that to contract with another company would be extremely risky," adding, "I don't think KHNP would go that far."

Professor Moon added that the current situation may have stemmed from contract management practices in existing nuclear power export projects. "I get the sense that practices that had been followed routinely may have festered and finally burst," he said. "If KHNP signed a contract based on a lump-sum amount, it should have known that contract changes could lead to a situation like this and prepared for it. Daewoo Engineering & Construction, too, should have anticipated the risks that could arise in overseas projects and properly negotiated the contract terms from the outset."

The union that raised the allegations also faces the burden of presenting evidence to support them. The claim that a public institution leading a national nuclear power export project deliberately derailed negotiations to transfer construction rights to a particular private company is a serious matter that, if confirmed, could lead to an investigation of those responsible and a review of the entire contracting process. Conversely, if the union presented specific companies or individuals' alleged misconduct as fact without objective evidence, it could face defamation claims or civil damages lawsuits. Whether the union bears legal responsibility may, however, depend on factors such as whether it raised the allegations in the public interest and whether it had substantial grounds for them.

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