The Ministry of Land, Infrastructure and Transport (Minister Hee-Ryong Won Won) discovered a total of 65 inappropriate cases as a result of a joint inspection of three redevelopment and reconstruction associations* conducted from May 23 to June 3, and provided investigation requests, correction orders and administrative guidance. decided to take action.
* Dunchon Jugong, Bomun District 5, Daejo District 1
The Ministry of Land, Infrastructure and Transport and the Seoul Metropolitan Government formed a joint inspection team with the Korea Appraisal Board, lawyers, and accountants to conduct on-site inspections of the overall operation of the association, including service contracts, budget accounting, association administration, and information disclosure of the reconstruction and redevelopment associations. It was announced that the final administrative action plan was decided by the Disposition Decision Deliberation Committee after reviewing the compliance of the collected data with related laws and checking the facts.
A total of 65 cases of ineligibility detection by field were 16 cases related to service contracts, 19 cases related to budget accounting, 26 cases related to union administration, 3 cases related to information disclosure, and 1 case related to contractor bidding.
Of these, 11 cases will be investigated, 22 cases will be corrected, 4 cases will be recommended for restitution, 27 cases will be administrative guidance, and 2 cases will be notified to the agency.
The main detection cases are as follows.
① Violations related to union operation
(Service contract) Despite the fact that matters that have a close impact on the rights of union members, such as borrowing money and conclusion of service contracts, are subject to a resolution at the general meeting*, there have been many cases in which projects were carried out without a resolution of the general meeting. Cases of private contracts were also discovered.
– (Cooperative A) Contracts without a general meeting resolution on contractors and amounts, etc. (13 cases, 159.6 billion won) → Request for investigation
* Association executives who have entered into a service contract without a resolution at the general meeting: Imprisonment for not more than 2 years or a fine of not more than 20 million won (「Urban Reorganization Act」 Articles 45 and 137, subparagraph 6)
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– (Cooperative B) The union borrows funds (200 million won) from the head of the association and borrows funds without a general meeting resolution on the fact of borrowing, interest rate, repayment method, etc. → Request for investigation
– (B Association) A professional maintenance business registrant is acting on behalf of the business implementation plan approval general meeting, management disposition general meeting, and contractor selection meeting (5 cases in total) → Request for investigation of unregistered business
* Persons entrusted with a rearrangement project under this Act without registering as a specialized management business for rearrangement projects: Imprisonment for not more than 2 years or a fine of not more than 20 million won (「Urban Reorganization Act」 Articles 102 and 137)
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– (Cooperative C) Signing of contracts that burden the members such as manpower supply contracts and construction contracts without prior general meeting or resolution of the delegates (25 cases, 560 million won in total) → Request for investigation
– (Cooperative C) Although the project operator has to engage in general competition when concluding contracts for construction and services, etc., he concludes a service contract through a private contract while signing a migration promotion service contract and business service contract → Request for investigation
* A union executive who has promoted the conclusion of a service contract in violation of the general competitive bidding principle: Imprisonment for not more than 3 years or a fine of not more than 30 million won (「Urban Reorganization Act」 Article 29 (1), Article 136 (1))
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(Budget Accounting) A number of violations related to the association’s budget accounting were discovered, such as not preparing integrated financial statements and not reporting the budget settlement comparison table.
– (Cooperative A) Do not separately organize budgets for operating expenses and project expenses related to the shopping mall reconstruction project, and do not prepare and report integrated financial statements including business expenses and operating expenses executed by the shopping mall when reporting the settlement of accounts of the association → Corrective order
– (Cooperative A) Even though salaries for full-time executives should be paid only to executives designated as salary items in the budget, in addition to the three full-time directors organized in the budget, one additional full-time director is appointed and paid → Correction order
– (Cooperative B) The budget settlement comparison table for operating expenses from 2016 to 2020 and the budget settlement comparison table for operating expenses from 2016 to 2019 were not prepared and not reported to the delegates and general assembly → Corrective order
– (Cooperative C) While executing the business promotion expenses, the document does not include details on the execution location, execution target, number of people, etc. → Administrative guidance
(Union administration) A number of violations related to union administration were also discovered, such as not writing a labor contract when hiring paid employees and not disclosing the construction cost verification report at the general meeting.
– (Cooperative A, Cooperative C) Failing to write a labor contract when hiring paid employees or not writing a new labor contract after changing working conditions → Corrective order, Ministry of Employment and Labor agency notification
– (Association A) Do not disclose the construction cost verification report (written by the Real Estate Agency) to the general meeting even after the contract for change of construction contract is signed → Corrective order
* According to 「Construction Cost Verification Standard for Maintenance Project」, it is stipulated that the project operator should disclose the verification report at the general meeting when the verification of construction cost is completed.
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– (Cooperative A) In violation of the Articles of Incorporation, the detailed business regulations of the Advisory Committee are not prepared, and the minutes of the Advisory Committee are not prepared and kept → Corrective order
– (Cooperative B) Elected as a full-time director at the general meeting or appoint a full-time director without a resolution by the board of directors or delegates → Administrative guidance
(Information Disclosure) In order to protect members’ right to know, many cases of violation of information disclosure obligations such as failure to disclose or delay in information disclosure were also discovered.
– (Cooperative A) Nondisclosure of information requested by union members, such as list of members, contract for selection of service providers, and details of fund execution (6 cases in total), or delay in disclosure of mandatory disclosure information (968 cases in total) → Request for investigation by union executives
* Association executives who do not disclose data related to the maintenance project or do not respond to requests for reading or copying: Imprisonment for not more than 1 year or a fine of not more than 10 million won (「Urban Reorganization Act」 Articles 124 and 138, subparagraph 7)
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– (Cooperative B) Delayed disclosure of management and disposal plans, project implementation plans, and minutes despite the need to be disclosed through the Internet (total of 122 cases) → Request for investigation
② Contractor bidding
– (Cooperative C) Indicate that the cooperative proposes a moving cost of 10 million won per household in the contractor selection bid participation guide, and the contractors indicate this in the bid proposal → request for an investigation by the cooperative and the constructor
* A person who provides money, entertainment, or other property benefits in connection with the selection of a construction company, expresses an intention to provide, or accepts an expression of intention to provide: Imprisonment for not more than 5 years or a fine not exceeding 50 million won 2)
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The Ministry of Land, Infrastructure and Transport and the Seoul Metropolitan Government will take legal action on the cases caught and plan to continuously check the construction process of bidding and cooperative operation in the second half of this year to prevent damage to the common people due to unfair practices.
In addition, we plan to guide the establishment of an order in the maintenance market by organizing the inspection results by type and disseminating them to other cities and provinces to prevent the recurrence of similar cases.
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