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(EDITORIAL from Korea Herald on Oct. 14)

Economy 06:50 October 14, 2021

Thorough investigation
Daejang-dong project suspicions piling up around Lee; special probe may be needed

Regarding the Daejang-dong land development scandal, President Moon Jae-in on Tuesday ordered the prosecution and police to cooperate in finding out the truth swiftly through thorough probes.

It is the first time that Moon disclosed his official position on the snowballing suspicions related to the project.

The scandal has emerged as the country's most pressing issue. It centers on allegations that Yoo Dong-gyu, regarded as a close aide to the ruling Democratic Party of Korea's presidential nominee and Gyeonggi Gov. Lee Jae-myung, were involved in allowing a little-known asset management company, Hwacheon Daeyu, to reap astronomical development profits from the project implemented when Lee was Seongnam mayor.

As Moon remarked, the truth must be revealed clearly. However, if they wrap up their investigation with some stones left unturned, the probe must not end there. A special investigation must follow.

The prosecution and police have given an impression that they lack the will to probe quickly and thoroughly.

Yoo is said to have thrown his new mobile phone out of the window when the prosecution raided his residence. The prosecution had said they failed to find it, but a day later, the police found it by checking surveillance camera footage.

The prosecution summoned Kim Man-bae, chairperson and the largest shareholder of Hwacheon Daeyu, for questioning Monday, about a month after the scandal broke out and 12 days after the investigation team was launched. They have not raided Seongnam City Hall yet.

Nam Wook, a lawyer known to be the owner of Cheonhwa Dongin No. 4, left for the US after news on the scandal began to draw attention. The prosecution did not ban persons of interest from leaving the country.

The police received data on dubious cash withdrawal from Hwacheon Daeyu's accounts from the Korea Financial Intelligence Unit in April, but they idled away for five months.

What attracts most interest from people is whether someone above Yoo, then acting chief executive of Seongnam Development Corp., was involved in the scandal.

Hwacheon Daeyu and its seven affiliates invested 350 million won ($293,000) and reaped approximately 1 trillion won in development profits.

The project business agreement initially contained a clause that requires the city to redeem excess earnings from private-sector participants, but the clause is said to have been deleted three months later. The key point is whether Lee approved the deletion wittingly.

Yoo has been charged for receiving a bribes from Hwacheon Daeyu and is currently remanded in custody because of the risk he might try to destroy evidence. He is accused of designing a profit distribution scheme that was excessively favorable to Hwacheon Daeyu.

However, Gov. Lee was Seongnam mayor at the time of developing Daejang-dong and revealed of his own accord that he did oversee the project.

Nevertheless, the prosecution has not questioned Lee yet.

Lee spoke vaguely about the distribution of the Daejang-dong development profits, saying to the effect that there was no way of him knowing because it was a private sector matter.

The prosecution requested an arrest warrant for Kim on Tuesday on charges of giving bribes.

Kim argues that he is the real owner of Cheonhwa Dongin No. 1, one of seven Hwacheon Daeyu affiliates which invested in the Daejang-dong project. Cheonhwa Dongin No. 1 received 120.8 billion won in dividends from an investment of about 104.66 million in the project.

But according to audio files recorded by accountant Jung Young-hak, who is the owner of Cheonhwa Dongin No. 5, Kim reportedly remarked to the effect that half of the dividend to Cheonhwa Dongin No. 1 belongs to someone whom he addresses as "sir."

Nam, the owner of Cheonhwa Dongin No. 4 who is in the US, said in a JTBC news program that Kim and Yoo usually addressed each other as "brothers." If Nam is right, Yoo is not the person whom Kim addresses with an honorific title. Considering Yoo is four years junior to Kim, the person whom Kim is said to have addressed as "sir" is likely to be someone above Yoo.

Seongnam pushed for the Daejang-dong development project. At that time, Yoo was head of the headquarters of an affiliated organization. Few would believe that Yoo alone took a part of dividends worth tens of billions of won.

The prosecution must find out whether Kim is the real owner of Cheonhwa Dongin No. 1 and who its real owner is, if Kim is not.

Suspicions are piling up around Gov. Lee. If the prosecution and police fail to clarify them thoroughly, they will face a situation where a probe by special prosecutors is inevitable.
(END)

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