The former Lee Myung-bak administration pushed the four-river refurbishment project with the intention to build a cross-country canal network, the state auditor said Wednesday.

The hidden long-term plan caused a number of serious problems such as bid rigging, increased costs and poor water quality management, the Board of Audit and Inspection said in its report.

Later in the day, Cheong Wa Dae said that the previous administration caused great damage to the state if the BAI’s report was true.

“(The Lee government) has deceived the people,” senior presidential press secretary Lee Jung-hyun said. “We have to tell the people what has gone wrong and fix the damage.”

During his presidential campaign Lee had pledged to build a 500-kilometer Grand Canal connecting Seoul to Busan. He announced in 2008 that he would scrap the plan in the face of public opposition.

Lee, instead, pushed the four-river restoration project to prevent flooding along the nation’s four major rivers ― the Han, Nakdong, Geum and Youngsan rivers. The river project cost 22.2 trillion won.

The BAI report revealed that the Ministry of Land and Transport’s master plan for the four-river restoration project was drawn up with the suspended canal in mind at the request of Lee’s presidential office.

“The plan allowed a consortium of builders initially recruited for the grand canal to participate in the four-river project so that they were able to fix the price to win bids,” a BAI official said.

The list of builders includes Hyundai, Daewoo, GS, Samsung Engineering & Construction Co., and Daelim Industrial Co. The consortium won most bids worth 3.4 trillion won. The land ministry leaked key bidding information to builders and did not take any actions even though officials were aware of builders attempting bid rigging, the BAI said.

The state auditor also criticized the nation’s antitrust regulator for not taking proper action against builders suspected of price fixing to win the bids.

The Fair Trade Commission had initially planned to impose a combined 156.1 billion won in fines on 12 construction firms but decided to slap 111.5 billion won in fines on eight firms. The regulator also withdrew its plan to sue six companies for unclear reasons.

The BAI inspection began in January after the parliament demanded a thorough audit into bid rigging allegations and whether state authorities act appropriately. The Park Geun-hye administration pledged to conduct a “thorough investigation” into a number of allegations involving the previous government’s four-river plan.

By Cho Chung-un  (christory@heraldcorp.com)