Construction Workers' Mutual Aid Association closed collusion report without probe; employee took gifts from contractor

The Construction Workers' Mutual Aid Association received a collusion report related to an information systems contract but closed the case without conducting a formal investigation, an audit has revealed. The same audit found that an employee handling IT-related work accepted entertainment and gifts from a work-related party and neither reported nor returned them.

The Ministry of Employment and Labor's inspector general's office made public an audit report on the association on May 18. The audit, which examined the association's IT development and project operations, found irregularities in contract management and violations of the Anti-Graft Act.

Public institutions are required to sign integrity agreements with bidders and contractors to ensure transparency and fairness in procurement. Under such agreements, parties pledge not to engage in conduct that undermines fair competition — such as pre-arranging bid prices or colluding to steer awards to specific companies. Failure to comply can result in the cancellation of a bid or award, or the termination of a contract.

Despite receiving a collusion report related to an IT systems contract, the association did not launch a formal investigation. The ministry said in the audit report that the association "closed the case without a formal investigation," meaning it wrapped up the matter without following proper procedures to determine whether actual collusion had occurred.

The ministry called for warnings to be issued to officials responsible for closing the collusion report without a formal investigation, citing violations of relevant regulations.

The audit also flagged improper conduct by an employee in charge of IT-related work. The employee was found to have received entertainment and gifts from a work-related party and failed to report or return them.

The Anti-Graft Act prohibits public officials and others from receiving, demanding or promising money or valuables worth up to 1 million won ($718) per instance or 3 million won per fiscal year in connection with their duties, regardless of whether there is a quid pro quo. The ministry determined that the employee's conduct violated the Anti-Graft Act and related regulations.

The ministry called for disciplinary action against the employee and directed that the relevant authority be notified of the violation for the purpose of imposing an administrative fine.

The ministry also directed the association to investigate whether similar cases exist internally. It ordered the association to conduct its own review of Anti-Graft Act compliance among employees handling IT-related work, establish measures to prevent recurrence — including monitoring of corruption-prone operations — and provide all staff with training on the Anti-Graft Act and related laws.

The ministry also ordered follow-up action on the contracts involved, directing the association to review whether to fully or partially terminate agreements with the relevant companies under applicable contract law and to act accordingly.

However, the audit report did not find a direct link between the collusion report and the employee's acceptance of entertainment and gifts. The publicly released report also did not disclose whether the company named in the collusion report and the work-related party who provided the gifts belonged to the same firm.

In its overall assessment, the ministry separately flagged management and oversight failures in the operation of IT projects, noting that follow-up measures — including an investigation into the collusion report concerning the IT maintenance contractor — had been inadequate, and confirming that an employee in the relevant department had received meals and other benefits from a contractor.

The Construction Workers' Mutual Aid Association is a quasi-governmental body that administers retirement mutual aid for construction workers and supports their welfare and vocational development. The ministry said the audit found a range of irregularities across the association's overall operations — including contracting, budgeting, personnel management and project execution — in which relevant rules and procedures had not been followed.