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Seoul Metro executive pulled strings for his family

July 12,2017
The Board of Audit and Inspection of Korea (BAI) announced Tuesday that an executive of Seoul Metro was found to have signed a contract with a train manufacturer under conditions unfair to other manufacturers, and in return improperly solicited the manufacturer to hire his nephew and sell unlisted stocks to his brother-in-law.

Seoul Metro runs subway line Nos. 1 through 8 in the city, and is a merger of former Seoul Metro, which ran subway lines Nos. 1 through 4 and the Seoul Metropolitan Rapid Transit (SMRT) which ran subway lines Nos. 5 through 8. The two merged in May.

“The BAI of Korea hereby requests Seoul Metro to place on suspension two employees who had tweaked company rules to sign a contract with a train manufacturer under conditions favorable to the manufacturer, [providing unequal opportunities to other manufacturers],” said BAI in its statement to Seoul Metro, “and dismiss an executive who had improperly solicited a third person’s employment at the manufacturer and helped another third person to buy unlisted stocks of the company by using insider information.”

The BAI came across the contract while investigating Seoul Metro after a teenage mechanic’s tragic death at Guui Station in northeastern Seoul in June last year. Public outcry over the accident snowballed when it was revealed that the teen’s company was forced to hire retired officials from Seoul Metro, many without real mechanic skills, forcing the regular mechanics to cover more shifts and put their lives at risk.

Seoul Metro signed a contract with a train manufacturer to buy trains for subway line No. 2, worth 209.6 billion won ($182 million) in 2015.

The contract was signed despite the fact that the train manufacturer had not met Seoul Metro’s standards in a public bidding, the BAI said.

The BAI found out that the train manufacturer had asked Seoul Metro to “not limit the bidding to only those companies with experience in successfully manufacturing train cars,” which two employees of Seoul Metro complied to by tweaking its rules.

The manufacturer had previously failed to provide 56 trains it was contracted to provide to the SMRT in 2012. It provided 48 in the end. By 2014 it had a net loss of 5.4 billion won.

In 2015, the 48 trains had broken down 10 times more often than trains provided by other companies.

The BAI uncovered that behind the two employees’ actions was an executive of the purchasing department, who had been in touch with an executive of the train manufacturer since 2014.

While the bidding was ongoing, the executive asked the manufacturer to hire his nephew in return for his favors.

The nephew was hired at the manufacturer after he told his uncle’s name in the job interview.

BY ESTHER CHUNG [chung.juhee@joongang.co.kr]