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staff photographer)

By Kim Tae-gyu, staff reporter

Special prosecutor Lee Kwang-bum concluded on Nov. 13 that a controversial property in Seoul’s Naegok neighborhood was “illegally donated” for the building of a retirement residence for President Lee Myung-bak.

Lee’s team plans to announce findings from its investigation on Nov. 14, and notify the National Tax Service that Lee donated the property to his son Si-hyeong, 34, whom they suspect of gift tax evasion.

The Naegok property has been the subject of allegations because of its suspiciously low purchase price, which created a loss for the state.

The team also plans to pursue indictment without detention for three to four individuals. Former Presidential Security Service (PSS) chief Kim In-jong, 67, and PSS employee Kim Tae-hwan, 58, are to be charged with breach of trust according to the Act on the Aggravated Punishment, etc. of Specific Economic Crimes for causing over 600 million won (US$550,000) in losses to the state. Also, one to two PSS employees are to be charged with systematic destruction of evidence before the special prosecutors’ investigation.

With evidence of Lee illegally donating the residence to his son, and the Blue House committing breach of trust by using the national budget for it, the president’s ethical image stands to take a major hit as he goes into the final phase of his term.

Analysts said the special prosecutors’ decision to indict Kim In-jong for breach of trust could be seen as an indirect means of holding Lee accountable. Kim previously stated that he reported to Lee on the purchase of the property and received his approval.

Criminal breach of trust is deemed to have occurred when an individual harms his or her own organization for personal gain or by helping a third party obtain personal gains through abuse of his or her responsibilities.

The charge is often made against chaebol chairmen or managers who cause losses to their companies for their gain. In such cases, chaebol have often countered that they made a management decision in the company’s interest and did not intend to hurt the company.

But in the Blue House’s case, land purchased in Lee Si-hyeong’s name was calculated at a value of more than 600 million won below its market price, while the cost of property for a security suite, built at taxpayer expense, increased by the same amount. The explanation given was that the latter land appeared set to increase in value because of the residence, and it was viewed as “improper” for the state to monopolize the gain from anticipated development in the future. In other words, it made clear its intent to cause a financial loss to the state while talking about development profits that had yet to actually be realized.

Kim drew the attention of the special prosecutors’ investigation because he claimed to have given explicit reports to the president while pushing the construction. In an interview printed in the December 2011 edition of the Shin Dong-A monthly, he responded to a question about whether Lee had visited the plot prior to the contract signing by saying, “We bought it after he visited and okayed it.”

He also said that Lee “visited [Naegok] before the contract. The contract was signed after [Lee] approved it. You can’t just do it any way you want when [the president] is investing money. I reported on everything.”

For the special prosecutors’ investigation, Kim was a “stepping stone” to check for possible breach of trust by Lee.

On Nov. 2, the team grilled Kim over the circumstances of Lee’s involvement in the building of the residence. At the time, the special prosecutor reported that Kim was “being questioned like a four-star general.” In contrast with his Shin Dong-A comments, Kim told prosecutors that he was responsible for all decisions, strenuously denying any connection between the breach of trust and President Lee.

Legal observers said this doesn’t resolve questions about Lee’s involvement.

“It makes no sense that the president knew nothing about the calculation of the price for the place he was going to live,” said one attorney. “If Kim In-jong is punished, it’s the same as the president being punished.”

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