Lee Seung-gi asked to pay subcontractor over unpaid construction fees

A subcontractor has demanded payment from singer and actor Lee Seung-gi over unpaid construction bills for a building on land he owns in Jangchung-dong, Jung District, central Seoul, according to findings by the JoongAng Ilbo on Monday.

The subcontractor filed a lawsuit against the contractor, a construction company linked to One Hundred Label Co-CEO Cha Ga-won, to receive payment for the work. It has also sent Lee a certified letter demanding payment, while the actor says the agreement requiring him to pay was forged without his consent.

In May, the head of a subcontracting company responsible for plastering work filed a lawsuit with the Seoul Central District Court against a construction company that Cha headed until her husband took over its management early this year. Construction of the property in question began in January last year.

Lee planned to build a five-story building with one basement level on the site and entrusted the project to the construction company under Cha’s oversight. Cha was also the head of the talent agency representing Lee at the time. 

The construction company was scheduled to complete the project by December last year and subcontracted portions of the work to others.

Lee had reportedly planned to move into the Jangchung-dong property after living under a jeonse (lump sum payment) lease in a villa owned by Cha and her husband in Hannam-dong, Yongsan District, central Seoul.

However, repeated delays pushed the project past its deadline, and the construction was completed only recently.

Lee paid all but part of the remaining balance. However, the construction company — which is now under Cha’s husband’s control — then asserted a lien on the building. It refused to hand it over unless Lee paid the outstanding balance as well as additional costs arising from the delays. Lee eventually filed for a provisional injunction to take possession of the building and is awaiting the court’s decision.

Amid the dispute, the subcontractor filed suit after the construction firm failed to pay 16 million won ($11,280) owed to the company for the commissioned work.

Last month, the subcontractor sent Lee a certified letter demanding payment based on a contract with the construction firm that reads, “The project owner, Lee, agrees to pay the subcontracting fees directly.”

However, Lee’s side refused to hand over the payment.

“The construction firm appears to have used Lee’s seal without authorization to draw up the contract without his consent,” Lee’s side said.

The subcontractor said the construction firm repeatedly fell behind on payments even while construction was underway.

“The 16 million won we have not received is a problem in itself, but it seems they are refusing to pay even though they have the means to do so,” the subcontractor said. “I suspect other companies besides ours have suffered losses as well. When Lee’s side is also saying it cannot pay us, where are we supposed to go to get our money?”

Lee’s side said the delays had already caused losses exceeding the outstanding balance and accused the construction firm of using Lee’s celebrity status to pressure him into paying subcontractors directly.

“Even without calculating the penalties for delayed completion, how can Lee be expected to pay the balance when the contractor’s lien has prevented him from even conducting an inspection for defects in the building?” Lee’s legal representative said.

“We also believe the document stipulating direct payment by Lee to the subcontractor was forged without Lee’s consent. If the subcontractor files a lawsuit against Lee and a court rules that he must pay, he will do so, but at this point, it is difficult for him to make the payment.”

A legal representative for the construction firm said the company has been unable to pay its subcontractors because it has yet to receive the outstanding balance from Lee.

“Even if Lee does not pay, we will find a way to secure the funds and pay the subcontractors,” the representative said.

On Friday, Cha was referred to prosecutors with detention on charges of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes. She is accused of receiving 24.2 billion won in upfront payments from the entertainment-technology company knowmerce after proposing business ventures based on the intellectual property of artists signed to her entertainment agency. However, she never delivered on the promised projects.

Cha has also been in disputes with Lee and other artists represented by her company over unpaid earnings and other issues.

BY BYUN MIN-CHUL [lee.soojung1@joongang.co.kr]