By Chang Dong-woo
SEOUL, Oct. 13 (Yonhap) -- The investigation into a snowballing regional development corruption scandal has picked up pace, with prosecutors seeking the arrest of a key suspect after President Moon Jae-in ordered a thorough probe into the case engulfing national politics.
On Tuesday, prosecutors sought an arrest warrant for Kim Man-bae, a former journalist, on a string of charges in connection with how his previously little-known asset management firm, Hwacheon Daeyu, reaped astronomical profits from a 2015 development project in the city of Seongnam, south of Seoul.
Earlier in the day, Moon instructed the prosecution and the police to "actively cooperate and do their utmost to uncover the factual truth through a swift and thorough investigation." It was the first time that Moon has commented on the scandal.
Prosecutor General Kim Oh-soo spoke with the national police chief, and the two sides agreed to set up a hotline between the district offices of the prosecution and police for cooperation on the probe, prosecution officials said.
The scandal has reverberated widely not only because of the scale of profits that Hwacheon Daeyu and its seven affiliates amassed but also because of its possible impact on the presidential race in the wake of the arrest of a close aide to Gyeonggi Gov. Lee Jae-myung, the ruling Democratic Party's presidential nominee.
Kim is suspected of colluding with the aide, Yoo Dong-gyu, who served as acting president of the Seongnam Development Corp. in charge of the city-run project, to get his firm to take part in the lucrative project to develop Seongnam's Daejang-dong district into apartment complexes.
In Tuesday's arrest warrant request, prosecutors alleged that Kim caused about 110 billion won (US$92 million) of losses to the Seongnam city government by engineering a contract between his firm and the project manager to remove a clause limiting the amount of profits that the firm can take from the project.
The scandal has emerged as the hottest political issue in South Korea amid opposition accusations that Gyeonggi Gov. Lee is responsible as mayor of Seongnam at the time. Lee is also believed to have ties with Kim as the former jouralist interviewed him seven months before establishing the asset firm.
The main opposition People Power Party (PPP) has accused Lee of masterminding the whole scheme and has called for an independent counsel investigation into the scandal while urging Lee to step down as presidential candidate.
Prosecutors are currently following leads reportedly based on secretly taped conversations between the project's key players recorded by Jeong Young-hak, an accountant who owns Cheonhwa Dongin No. 5, an affiliate of Hwacheon Daeyu.
On Monday, prosecutors questioned Kim over allegations that he bribed Yoo in order to have his company chosen as a civilian partner in the project. They also reportedly tried to identify an unnamed person in the recording who Kim reportedly referred to as "that person."
In the recording, Kim reportedly told his business partners that the mysterious person owns 50 percent of Cheonhwa Dongin No. 1, one of the asset firm's affiliates, which reaped more than 120 billion won in profits from the project.
Yoon Seok-youl, former prosecutor general and a leading opposition presidential hopeful, claimed that Lee is "that person," urging him to admit to the allegations and volunteer to be investigated.
Lee has categorically rejected all allegations against him as "fake news," including his relationship with Yoo, arguing that he did not gain a single penny from the project and that the opposition party is raising allegations against him in an attempt to cover up its own wrongdoing.
Prosecutors are hoping to dig deeper into the allegations through Kim's arrest.
A court hearing on his arrest will be held Thursday.
Meanwhile, Nam Wook, a lawyer and another key figure in the scandal currently residing in the United States, is reportedly preparing to return home to be questioned. He is known to have recently hired lawyers to face the probe, according to sources with knowledge of the matter.
In an interview with cable TV network JTBC on Tuesday, Nam confirmed allegations raised through the taped conversations that key figures involved in the project talked about spending 35 billion won to bribe high-profile figures.
S. Korea, Japan ties again at major juncture in leadership transition period
Sejong closer to becoming virtual administrative capital
(News Focus) City development controversy widens amid revelation of astronomical severance pay for opposition lawmaker's son
On U.S. trip, Moon highlights S. Korea's global role, vaccine hub vision
Moon seeks breakthrough in peace process with concrete offer of war-ending declaration