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Photo = Yonhap news |
[Alpha Biz= Kim Jisun] Shipbuilding and plant specialist SK Oceanplant, headquartered in Goseong, South Gyeongsang Province, has been sanctioned by the government for failing to issue contracts to subcontractors.
On Wednesday, the Korea Fair Trade Commission (KFTC) announced corrective orders and a fine of 52 million won against SK Oceanplant for violating the Subcontracting Act.
The KFTC investigation revealed that between February 2019 and December 2021, SK Oceanplant commissioned the manufacturing of ship components and other parts to 48 subcontractors across 436 cases without fulfilling its obligation to issue written contracts.
Specifically, SK Oceanplant issued unsigned purchase orders instead of formal contracts for 20 transactions related to plating and painting work on ship components commissioned to five subcontractors, citing these as “one-off transactions.”
Additionally, for 416 cases of modified or additional work related to manufacturing ship components with 43 subcontractors, the company failed to issue legally required documentation, including details of the work or subcontract fees. Instead, it substituted settlement agreements 9 to 100 days after the work was completed.
During the review process, SK Oceanplant argued that the unpredictable nature of the shipbuilding industry, with frequent design changes, made issuing prior written contracts unnecessary for modified or additional work. However, the KFTC rejected this defense.
A KFTC representative emphasized, “This decision confirms that the shipbuilding industry’s practice of not issuing written contracts remains unresolved, and strict measures have been taken. Moreover, the Supreme Court recently ruled (on November 28) that modified or additional work cannot be exempt from the written contract requirement under the Subcontracting Act.”
In response, an SK Oceanplant representative clarified, “The penalties concern violations of the Subcontracting Act that occurred during the time of Samkang M&T, the predecessor of SK Oceanplant, between 2019 and 2021, prior to SK Group’s acquisition (August 31, 2022).”
The company further explained, “Since SK’s acquisition, no violations of the Subcontracting Act have occurred. To ensure compliance, we have established a dedicated compliance management team, introduced a voluntary fair trade compliance program, and implemented an electronic subcontracting contract system. Additionally, we’ve streamlined and expedited work order issuance procedures to prevent any harm to subcontractors.”
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
