Seoul Mayor Oh Se-hoon came under fire at a parliamentary audit over the Hangang Bus, one of his signature projects, after governing party lawmakers raised allegations of kickbacks and a cover-up by the city government. "An audit is currently underway, and we will refer the case to investigators if necessary," Oh said. Opposition lawmakers, meanwhile, focused on rising home prices in the capital, with Oh pointing to the central government's real estate policy as a main driver.
At the National Assembly Public Administration and Security Committee's audit of the Seoul city government, held at City Hall in Jung-gu, Seoul, on the 15th, lawmakers questioned allegations that a senior executive at the Seoul Housing & Urban Development Corporation (SH) received about 1.5 billion won in kickbacks in connection with Gadeok Heavy Industries, which won the contract to build vessels for the Hangang Bus. Rep. Park Ju-min of the Democratic Party of Korea and fellow party member Rep. Kim Young-bae pressed Oh on why no referral was made to investigators, and why the referral document was destroyed, after he was briefed on the allegations in September last year and ordered that such a document be drafted.
Oh countered that he was aware of the problem at the time and decided to request an audit from the Board of Audit and Inspection rather than conduct an internal review, in order to secure a more objective investigation. "Around September last year, I was briefed on the allegations and instructed that the matter be investigated rigorously enough to warrant drafting a referral to investigators," he said. "I then requested an audit from the Board of Audit and Inspection covering the overall matter, and I believed the board would look into these allegations as well." He said, however, that he did not clearly recall whether he had personally ordered the referral document to be drafted.
On the current status, Oh said the Board of Audit and Inspection had dismissed the request on the grounds that the matter was subject to internal audit, and that the Seoul city audit commission was now reviewing the allegations. "Depending on the findings, we will refer the case to investigators and request an audit if necessary," he said.
Lawmakers also questioned the project's viability and operations. Rep. Park Jung-hyun of the Democratic Party of Korea pointed to profitability and fiscal strain, saying, "SH had provided 87.6 billion won in loans to the Hangang Bus, and another 21.4 billion won was added late last year, pushing the total past 110 billion won." Oh responded that projects such as the Hangang Bus require heavy upfront investment. "We explained to the city council that initial losses were expected," he said. "After a year of operation, revenue has more than doubled from last year, and the Hangang Headquarters and the operator judge that the project can turn a profit after three years, as originally projected."
Opposition lawmakers made rising home prices and housing supply in Seoul their main line of questioning. Asked by Rep. Seo Myung-ok of the People Power Party about the causes of the increase in Seoul home prices, Oh said, "The current government's housing measures, which place excessive emphasis on owner-occupancy, are having the side effect of sharply reducing the supply of jeonse (a lump-sum deposit lease) listings in the northeastern and southwestern parts of the city." He added, "With not only jeonse deposits but also monthly rents rising, many residents feel anxious and conclude they must borrow to buy even at high prices, and that is generating speculative demand."
On the impact of the slowdown in redevelopment and rebuilding of aging apartment complexes during the tenure of former Mayor Park Won-soon, Oh said, "Tens of thousands of units that should have been supplied each year disappeared, and the effects will continue for the next several years." He said, "This year, construction began on 15,000 units, and in August we saw the first completion of a Moa Housing project, a Seoul initiative that consolidates small adjacent lots of aging low-rise homes for joint redevelopment into apartment complexes," pledging to keep expanding housing supply through programs such as the Rapid Integrated Planning scheme.
Lawmakers also pressed on responsibility for missing reinforcing bars found during construction of Samseong Station on the GTX-A line. Asked by Rep. Jin Jong-oh of the People Power Party about accountability for the incident and damages stemming from construction delays, Oh said, "I feel a sense of responsibility because we are in a position to manage the project overall, but this was not originally a Seoul city project — it was entrusted to us by Korea National Railway." He stressed that the city had followed the relevant procedures, including notifying Korea National Railway of construction defects on six occasions.
On damages arising from the delays, Oh said, "If the Ministry of Land, Infrastructure and Transport and the Seoul city government cannot agree on how to divide responsibility, it will have to be settled in court." He added, "Ultimate responsibility for defective construction will rest with the builder."