South Korean contractors reject expressway compensation demand

By Thanh Lam   October 17, 2023 | 07:42 pm PT
South Korean contractors reject expressway compensation demand
Potholes seen at Da Nang - Quang Ngai Expressway in October 2018. Photo by VnExpress/Dac Thanh
South Korean contractors Posco E&C and Lotte E&C have refused to pay compensation for damages in the billion-dollar Da Nang – Quang Ngai Expressway, saying their work was faultless.

The second phase of the expressway, a 72-kilometer section between Quang Nam and Quang Ngai provinces in the central region, is now the subject of a lawsuit by the government that claims the builder, the Vietnam Expressway Corporation (VEC), failed to meet quality standards, causing it a loss of VND460 billion ($18.78 million).

The first phase too had quality issues, with inspectors finding potholes and uneven surfaces, and in 2021 a Hanoi court hauled up 36 individuals for "violations related to the construction which caused severe consequences."

It sent two former bosses of VEC to six and seven years in prison.

Speaking about the current lawsuit, the VEC has said that if there are quality issues with the construction, the four foreign contractors, the other two being Chinese, would need to pay compensation for them.

Lotte E&C said it got two out of five contracts in the 72-kilometer section, 100% of one and 45% of other. Vietnamese company CC1 got the remaining 55%.

Lotte said it built the sections precisely to contract requirements and conducted regular quality checks.

The VEC had hired a third-party quality supervisor to review the work, and no issues were found after the construction was completed, it said.

The State Inspection and Acceptance of Construction Works also deemed the road up to standard, and during the two-year warranty period Lotte did not receive any complaints about damages nor was it required to carry out any repairs, it said.

Even now, five years after construction, the section it built is in good shape and vehicles travel at up to 150 kilometers per hour, and it has demonstrated this in court through three videos, it added.

The accused seen at a court on violations at Da Nang - Quang Ngai Expressway in Hanoi on October 17, 2023. Photo by VnExpress/Danh Lam

The accused seen at a court on violations at Da Nang - Quang Ngai Expressway in Hanoi on Oct. 17, 2023. Photo by VnExpress/Danh Lam

Posco E&C also told the court it would not pay any compensation to VEC since an independent supervisor had confirmed that the construction met quality standards.

CC1, the Vietnamese contractor, said a recent evaluation of the road, which claimed that it did not meet quality standards, is incorrect.

No one representing the two Chinese contractors showed up in court as they have not received permits to represent the companies in Vietnam.

The Da Nang-Quang Ngai Expressway is a key infrastructure work whose construction began in 2013 and was completed in 2018 at a cost of VND34.5 trillion ($1.4 billion).

VEC belongs to the Ministry of Transport.

Thus far 22 people, including 11 VEC executives, have been arrested pending investigation on violations in the the second phase of construction.

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