Nov 01, 2018 / 17:19

South Korea’s Posco violates Vietnam law in billion-dollar expressway project: Experts

The Hanoitimes - The construction ministry’s inspectors have also found out many wrongdoings of Posco at VEC-invested expressway projects.

South Korea-headquartered Posco Engineering & Construction Co., Ltd has violated Vietnamese legislations in conducting an expressway project in central Vietnam, local media quoted legal experts as saying.
A section of A5 bidding package. Photo:
A section of A5 bidding package. Photo:
Posco, which acted as the main contractor for the Da Nang-Quang Ngai expressway project costing VND34.5 trillion (US$1.49 billion) invested by Vietnam Expressway Corporation (VEC), assigned the entire A5 bidding package to its subcontractors without conducting any part of it, local newswire reported.

Dr. Tran Chung, former head of State Agency for Construction Quality Inspection under the Ministry of Construction, said that the contractor is eligible to sign different contracts with capable sub-contractors who work in the same sector, but it is illegal to award the whole bidding package to sub-contractors. Mr. Tran cited Decree 48/2010 and Decree 37/2015 as ground for his statement.

Echoing Mr. Tran, legal expert Mai Quoc Viet said that Posco needs to assume responsibilities for its volume, quality, and progress of the bidding package regardless of building or hiring sub-contractors as stated in Circular 09/2016.

Article 89 of the circular regulates the ban of making profits from handing over bidding packages to sub-contractors by the contractor, Mr. Mai said, adding that the contractor also violates laws if the contracted work costs more than VND10 billion (US$431,000).

In the bidding package which is worth VND800 billion, Posco hired a consortium of Thien An Co. and Vinaconex JSC to cover the A5 bidding package at a cost of VND597 billion.

In an inspection report dated April 12, 2017, Le Van Doan, head of inspectors at the Ministry of Construction, noted that Posco did not conduct any part of the bidding package. The company signed contracts with sub-contractors without the investor’s approval and adjusted working volume without reporting to the investor or supervision consultants.

The 140-kilometer Da Nang-Quang Ngai expressway was built at a cost of VND34.5 trillion and financed by the World Bank, the Japan International Cooperation Agency, and counterpart fund. The project, which includes 13 bidding packages, was kicked off on March 19, 2013 and open to traffic on September 2, 2018.

In another move, the Ministry of Construction’s inspectors have found out many wrongdoings of Posco at VEC-invested expressway projects, namely Ho Chi Minh City-Long Thanh-Dau Giay, Noi Bai-Lao Cai, and Da Nang-Quang Ngai.