Land Development Scandal Probe Targets Gyeonggi Governor

  • By Pyo Tae-jun

    October 15, 2021 12:35

    Minjoo Party presidential candidate and Gyeonggi Province Governor Lee Jae-myung is "among the targets" of an investigation by prosecutors into a land development scandal, prosecutors said Thursday.

    Seoul Central District Prosecutor Lee Jung-soo told a National Assembly audit on Thursday that the governor is being investigated in the snowballing scandal that unfolded in Seongnam south of Seoul in 2015, when Lee was mayor there.

    Several other former city officials have been accused of helping private businesses reap huge profits from the land development project and caused massive losses to the city.

    But the district prosecutor denied that an audio recording potentially implicating the then-mayor, made public by the owner of an affiliate of the obscure company in question, Hwacheon Daeyu Asset Management, refers to Lee Jae-myung. In the recording, Kim Man-bae, the owner of Hwacheon Daeyu Asset Management, is heard to say that "half of the dividends" from the project go to "someone you know."

    Kim Man-bae, the owner of Hwacheon Daeyu Asset Management, answers questions from reporters at the Seoul Central District Court on Thursday. /Yonhap

    Prosecutors are saying that the trail of evidence stops with the former head of Seongnam Development Corp., Yoo Dong-gyu, who has already been arrested on suspicion of taking W70 billion in bribes and misappropriating hundreds of billions in city funds (US$1=W1,186).

    The question is how much the governor knew and whether he benefited personally. "It's obvious that Governor Lee was the final decision-maker in the project that generated astronomical profits for seven private businessmen, so he will have to be investigated," one lawyer said. "If the governor was briefed daily on the project, it will be difficult for him to avoid charges of misappropriating funds."

    There is considerable suspicion that the governor was more deeply involved. He told reporters on Sept. 14, "I designed the project but Yoo was the official in charge" of the "successful" project, which attracted W180 billion worth of investments from private businesses.

    But city regulations required Yoo to report to Lee Jae-myung. In fact, the city enacted a new regulation giving the mayor the final decision in all matters related to the project. Lee personally signed a document in January 2015 authorizing the project.

    Prosecutors raid Seongnam City Hall in Gyeonggi Province on Friday. /Newsis

    But there are fears that massive amounts of evidence have been shredded while prosecutors waited over 20 days before searching Seongnam City Hall on Friday morning.

    Yoo for his part has denied all charges, and the maximum 20 days he can be held on suspicion alone are nearing an end.

    Many prosecutors are privately suspicious whether the probe has been properly conducted. Prosecutors in charge apparently excluded any specific details of the project in their arrest warrant for Kim, saying only that the venture caused W116.3 billion in damages to the city by not capping the profits the builder could make.

    The Seoul Central District Court duly turned the arrest warrant down citing insufficient cause.

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