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KT referred to prosecutors for rigging contract deals

Apr 26,2019
Korea’s corporate regulator said Thursday that it referred KT to prosecutors for colluding with telecommunications companies to win contracts from the government, blocking KT’s plans to become a major shareholder of K bank.

The Fair Trade Commission (FTC) said Thursday that it found that KT, SK Broadband, LG U+ and Sejong Telecom had rigged results on 12 bids for network installations for government agencies from April 2015 to June 2017. It fined the companies a total of 13.3 billion won ($11.5 million) and referred KT to prosecutors.

The announcement places a hold on KT’s recent efforts to raise its stake in K bank last month as the Financial Services Commission (FSC) can stop the review process if the company seeking approval is under investigation by the authorities.

An FSC official confirmed Thursday that the review of KT’s application will be halted until investigations are complete.

KT is currently the second-largest shareholder with a 10 percent stake.

A KT spokesperson said that the company will work to prevent such actions and that it will decide on whether to take legal action after internal discussions, without elaborating further.

The FTC said KT was most involved in the scheme as it won nine of the 12 suspect contracts.

According to the corporate regulator, the telecommunications companies made arrangements to ensure a designated company could win a contract by rival firms not taking an active role in the bid or not participating at all.

The FTC said the agreements allowed the companies to prevent competitive pricing.

It added that the company that won the order would compensate others by leasing their networks. The FTC found five instances amounting to a total of 13.2 billion won without the networks actually being used.

For example, during a bid for network installation for the Ministry of Employment and Labor in April 2016, KT and LG won the contracts as SK Broadband did not actively participate in the bidding process, according to the FTC.

The regulator said KT and LG signed contracts worth more than 4.5 billion won in total to lease SK’s networks without using it.


BY CHAE YUN-HWAN [chae.yunhwan@joongang.co.kr]