The prosecution is investigating construction firms involved in a controversial state project to clean up four major rivers on collusion charges. The Fair Trade Commission is also under investigation over whether its actions against the firms were appropriate.

The Seoul Central District Prosecution’s Office searched and seized the commission’s office in June and is expected to summon the officials in charge this month.

A group of liberal civic organizations filed a complaint in early June against the FTC’s chief and officials, as well as 16 construction company heads, for illicit bid-rigging.

The commission had found evidence of irregularities by 19 bidding companies but did not refer the case to the prosecution. Instead, it imposed a combined fine of 111.5 billion won ($98 million) on eight of them and issued a non-binding warning to three others.

The screening official in charge suggested that at least six of the companies should be charged with unfair trade practices but the proposal was turned down by the commission’s plenary committee, prosecution officials said.

The multi-billion-dollar project to refurbish four major rivers is one of the most controversial works of the Lee Myung-bak administration.

Critics said the project not only damaged the environment but that it was also a back-scratching alliance between the administration and the construction industry.

By Bae Hyun-jung (tellme@heraldcorp.com)