Company says it settled existing construction costs with Gadeok Heavy Industries, not subcontractors directly; termination decision made to prevent shoddy work and cost overruns on six vessels
Han River Bus Co. has pushed back against media reports claiming it paid debts owed by a prime contractor to its subcontractors, calling the accounts inaccurate.
The company said Monday it never made direct payments to any subcontractors of Gadeok Heavy Industries, and that it had instead settled construction costs already incurred with Gadeok Heavy Industries, its contractual counterpart as the prime contractor.
Earlier reports alleged that Han River Bus had covered payments Gadeok Heavy Industries owed to its subcontractors, and that doing so was problematic because the revised contract explicitly stated no additional costs would be incurred.
In response, Han River Bus said it had decided to terminate the construction contract to prevent shoddy work and cost overruns on the six vessels Gadeok Heavy Industries had been building.
Before the termination, a settlement of actual costs for work already completed was necessary, the company said. It verified documents submitted by Gadeok Heavy Industries, adjusted the figures and made payment accordingly.
The company said the settled amount was not additional costs arising after the contract revision, but actual expenses for work already performed before the revision. The settlement was therefore a separate matter from the clause in the revised contract stating that no additional costs would be incurred, it said.
Han River Bus also addressed reports that one of its officials had negotiated directly with subcontractors and adjusted payment amounts to 50 to 60 percent of the amounts claimed. The company said the adjustments were made during the process of verifying and reviewing documents submitted as part of settling construction costs with Gadeok Heavy Industries.
The company said the measure was taken to prevent excessive disbursement of construction funds.
"We did not pay off the debts of subcontractors — we settled existing construction costs with Gadeok Heavy Industries, the prime contractor," a Han River Bus official said. "Because this was a settlement for work already completed before the contract revision, it is different from paying additional costs incurred after the revision."
However, fully clarifying the nature of the dispute will likely require a detailed accounting of the amount Gadeok Heavy Industries originally claimed, the final settlement figure, the process used to verify actual construction costs, and whether payments to subcontractors were in fact made directly.
seouldream01@heraldcorp.com
