The prosecution is investigating allegations of corruption surrounding the light rail transit project in Yongin City, Gyeonggi Province. Prosecutors have already banned some 30 people involved in the project, including two former mayors of the city, from leaving the country.
The project started in 2004 to build an 18.5-km fully-automated rapid transit line connecting Everland amusement park with the Seoul metro system. The project was completed in June 2010 at a total cost of 728.7 billion won. The central and city governments provided some 300 billion won, while the remainder came from the consortium that built the rail line.
The consortium concluded a 35-year build-operate-transfer concession contract with the city in 2004, with the latter promising to compensate the builder for operational losses for 30 years.
While the transit system was ready for service more than a year ago, the city government could not open it for commercial operation due to the expected losses. According to the city’s estimate, if the transit system goes into public service, it would incur a yearly deficit of 55 billion won, way beyond the loss estimated by the original feasibility study.
The city government wanted to adjust the amount of compensation but could not reach an accord with the consortium. Then in February, the consortium brought the case to the International Court of Arbitration, claiming a total of 770 billion won in construction costs and damages resulting from the city’s failure to keep its side of the contract.
On Oct. 4, the court told the city to pay the consortium 516 billion won in construction costs, setting Oct. 11 as the deadline for the first tranche amounting to 453 billion won. But the city could not meet this deadline.
Unable to make the payment to the consortium on its own, the city government is looking to the central government for assistance. Yet not a penny of taxpayers’ money should be spent for a project promoted by a reckless local government. The city should find a solution for itself.
Yongin is not the only city in trouble due to a costly light rail transit project. Uijeongbu City is also expected to incur huge losses when its rail project goes into service next year. Incheon has built a monorail system by investing 80 billion won but is considering demolishing it at a cost of 20 billion won due to its defects.
The prosecution needs to thoroughly investigate the corruption allegations concerning the Yongin project and punish those who led the city government in the wrong direction.