An executive of Seoul Metro, a subway operator in the capital, received personal favors from a company in return for helping it win a contract to supply trains, the state audit agency said Tuesday.

The Board of Audit and Inspection of Korea said it has requested the subway operator to dismiss the official, a 57-year old surnamed Cho, and impose severe disciplinary action on two other individuals linked to Cho’s alleged wrongdoings. 

Cho is suspected to have influenced the bidding process for a 210 billion won ($182 million) contract to manufacture trains for Subway Line No. 2, to the advantage of the company.

In return, Cho demanded the supplier sell unlisted stocks of its sister companies to his brother-in-law, while also making it hire one of his family members.

Seoul Metro publicly announced a bid to replace 200 cars for Subway Line No. 2 in February 2015. The company in question was selected at the end of March in the same year. Cho was in charge of the deal at the time.

The inspection found out that Cho and the representative of the company had been in contact since 2014.

In addition, the company has asked for Seoul Metro not to limit the bidding process to companies with experience of having supplied subway trains. The firm was selected to run the project after it established a consortium with another company which had no experience in subway train production.

The subway operator accepted the request, allowing the consortium to win the bid. It had previously limited its selections to companies that have experience in building the cars, from 2004 to 2007.

The audit agency revealed that the subway operator’s selection was unreasonable, as the firm was in financial difficulties at the time and was in court receivership. The company’s 48 electric cars that ran for Subway Line No. 7 frequently malfunctioned, with its failure rate appearing to be 10 times higher than other trains in Subway Lines Nos. 5 to 8 in 2015.

“When making a contract on the car purchases, citizens’ safety must be considered as the top priority,” a BAI official said. “Cho’s act has caused a loss of objectivity and fairness, providing preferential treatment to a company that was criticized for a high rate of malfunctions.”

Cho’s nephew is also found to have unfairly been hired by the company two years ago, despite his lack of experience in the field.

During the inspection, Cho is reported to have raised objections to the audit agency. He was also preparing for possible administrative litigation.

By Jo He-rim (herim@heraldcorp.com)