16 major group companies subject to supervisory measures, including two-week suspension of business, for violating the Construction Business Act
Updated: July 2025, 10
On January 2025, 1, Panasonic Holdings announced that it had received disciplinary action, including orders to suspend operations, from the Ministry of Land, Infrastructure, Transport and Tourism's Regional Development Bureaus, Okayama Prefecture, and Okinawa Prefecture following a violation of qualifications by a group company.
What happened at the major group companies?
On August 2021, 8, the Panasonic Group announced that employees who did not meet the practical experience requirements had taken the technical qualification exam and obtained construction management engineer qualifications, and that employees with insufficient practical experience had been assigned as full-time engineers at sales offices and on-site technicians. As a result, 31 group companies have apparently been disciplined by the Regional Development Bureaus of the Ministry of Land, Infrastructure, Transport and Tourism, Okayama Prefecture, and Okinawa Prefecture.
Nine companies received business suspension orders based on Article 28, Paragraph 3 of the Construction Business Act, and 9 companies received instructions based on Article 28, Lecture 1 of the Construction Business Act.The 10 companies that received instructions were informed of the violations and the details of the disciplinary action to prevent recurrence, and training and education plans were developed and implemented on an ongoing basis to ensure strict compliance with the Construction Business Act and related laws and regulations, as well as to improve and strengthen their business management systems.
What was the problem?
In this case, the specific causes were as follows:
- People who did not meet the qualification requirements were assigned as chief engineers or supervising engineers at construction sites.
- The company had appointed a full-time engineer at the sales office who did not meet the qualification requirements.
- Engineers without the required work experience fraudulently obtained national qualifications
- There were no chief engineers or supervising engineers at multiple construction sites, etc.
Let's take a look at why this happened from the perspective of the Construction Industry Law.
◆As a premise
First, in order for a business operator to obtain and maintain a construction business license, they must have a full-time, dedicated engineer (office engineer) at their office. Furthermore, for contracted construction work in industries for which they have obtained a construction business license, they must also assign an on-site engineer, known as a "deployed engineer," in addition to the office engineer. These on-site engineers must be appropriately qualified, depending on the type of work at the construction site, the contract amount, etc.
◆As the Construction Industry Law
The focus of this case is that someone who did not meet the eligibility requirements passed the exam, became a qualified employee, and became a sales office engineer or assigned engineer. This is because a violation of the assignment obligation by an assigned engineer is an act that could result in criminal penalties such as fines. If the act is deemed to be malicious and the person is fined, it will be deemed to meet the disqualification requirements for the license, and the person will not be able to obtain a construction business license for the next five years.
Actual examples of administrative guidance in the past
Case 1
The company was suspended from business for 30 days because it appointed A, who does not fall under Article 7, Paragraph 2, A, B, or C of the Construction Business Act, as its chief engineer and did not appoint a chief engineer who met the qualification requirements. Furthermore, in the application for business scale evaluation, with March 31, 2021 as the reference date, the company was instructed to state false details about A's work experience in the technical staff practical experience application form and to list A, who did not meet the qualification requirements, in the technical staff list.
Case 2
A third-party committee discovered that the approval process for practical experience for construction management engineers and supervising engineers had become a mere formality, and that employees who had obtained qualifications fraudulently were involved in electrical equipment construction work, etc. The company's name was made public and it was given supervisory sanctions.
Case 3
A third-party committee discovered that the company had taken the technical qualification exam for a "construction management engineer" without having met the required period of practical experience, thereby obtaining the qualification fraudulently. The company's name was made public and it was given supervisory sanctions.
Summary
When people hear the term "administrative sanctions," they often think of extremely malicious or illegal cases and believe that "they have nothing to do with our company." However, if you actually look at examples of administrative sanctions, you'll find that they often involve issues such as "failure to properly implement necessary systems for carrying out business operations," which would surely make some construction companies shudder.
In particular, in this case, a major group of companies had been engaged in false certification on an organizational level for a long period of time, which raised questions about the social credibility of large companies and their approach to compliance.
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