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| HDC Group Chairman Chung Mong-gyu issues an apology for the June 9 building collapse incident, at Gwangju City Hall on June 10, 2021. Courtesy of the Gwangju City Government |
Chung Mong-gyu to announce measure to take responsibility on Monday
By Baek Byung-yeul
Chung Mong-gyu, the chairman of HDC Group, is enmeshed in his biggest leadership crisis in the 23 years since he took office in 1999, as the group's crown-jewel apartment construction business has come under fire, after two building collapse incidents that occurred in Gwangju on June 9, 2021 and this past Jan. 11.
When the building collapse that killed nine people at HDC Hyundai Development Company's redevelopment project occurred in the southwestern city in June, Chung firmly vowed to prevent recurrence with an apology to the public, but his promise has been shattered by a second major building collapse at another of the company's apartment complex construction sites in the city.
Following the accident, one construction worker was found dead and five are still missing. The chairman visited the Hwajeong IPARK apartment collapse site, but he has not yet made an official statement or appearance concerning the Jan. 11 accident.
HDC said Sunday that Chung will take responsibility for the collapse of the exterior walls of the apartment building and is expected to announce his position on Monday.
The chairman is also expected to offer a formal apology to the victims and bereaved families.
An official familiar with HDC said that Chung might need to withdraw completely from managing the group's construction business and instead appoint a professional manager to supervise the affiliate.
"I understand that Chairman Chung is taking the gravity of the situation seriously and discussing his future with the management," the official said. HDC Hyundai Development Company is run by a professional manager, but Chairman Chung is known to be involved in the decision-making process as the chairman of the group.
The industry view is that Chung needs to act to restore the group's lost credibility.
Since the Jan. 11 accident, the Gwangju City Government ordered HDC to temporarily suspend all of its construction projects underway in the city. With the suspension order, all apartment complex construction projects that are capable of accommodating around 9,000 households have been halted.
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| Banners opposing the choice of HDC as the developer for the reconstruction of an apartment complex hang in Anyang, Gyeonggi Province, Sunday. Yonhap |
The aftermath of the series of accidents is also affecting other apartment reconstruction sites, as residents, who are set to choose the construction company for their new apartment complex, are arguing that HDC should be excluded.
A group of apartment residents in Anyang is currently choosing between HDC and Lotte Engineering & Construction to handle the reconstruction of the aging residential complex. However, after the recent collapse incident, members of the group posted messages online saying that they cannot trust HDC.
Some union members also hung banners at the entrance of their apartment complex saying, "We cannot leave our property and lives in HDC's hands!" or "I will return my deposit to HDC, so please leave!"
Investors are also skeptical about the company's future value, as the price of HDC Hyundai Development Co. stock fell more than 28 percent from Wednesday ― a day after the incident occurred ― to Friday.
Analysts said that it won't be easy for the company to see its shares recover soon.
"The stock price, which had fallen nearly 40 percent by the end of November, since the building collapse incident in June, had recently rebounded, but it has returned to its past level after the second accident occurred on Jan. 11," Ra Jin-sung, an analyst at KTB Investment & Securities, said.
"It seems difficult for there to be a further strong fall when evaluating the company company's current value, but it will also be difficult to recover quickly, considering the decline in its brand image and the possibility of consumers demanding changes in construction," the analyst added.
