Korean prosecutors take aim at Lee Jae-myung with raids over new development scandal

Posted on : 2022-09-01 17:18 KST Modified on : 2022-09-01 17:18 KST
Prosecution insiders and other analysts suggested the investigation has begun explicitly going after the higher-ranked officials in Seongnam at the time, including Lee
Lee Jae-myung (Yonhap)
Lee Jae-myung (Yonhap)

Prosecutors conducted a large-scale search and seizure effort as they began openly investigating a development project for Wirye New Town in Seongnam, Gyeonggi Province, which has been described as very similar to another project in Seongnam’s Daejang neighborhood that was mired in scandal.

With this, the investigation team that had been fully reinvestigating allegations of preferential treatment in the Daejang development case expanded its net to include the similarly structured Wirye project. This translated into pressure on two different fronts for Democratic Party leader Lee Jae-myung, who held final approval authority for both projects as the mayor of Seongnam at the time.

The third anti-corruption investigation division at the Seoul Central District Prosecutors’ Office, headed by Kang Baek-sin, conducted search and seizure efforts Wednesday morning on around 20 different locations, including Hoban Construction, which is responsible for the development of the A2-8 block in Wirye New Town. Also included were the project’s asset management company, the offices of the agency responsible for selling lots, and the homes of implicated individuals.

The prosecutors received a warrant to conduct search and seizure activities to investigate changes including the exchanging of bribes in violation of the Act on the Prevention of Corruption and the Act on Aggravated Punishment, etc. for Specific Crimes.

Prosecution insiders and other analysts suggested the investigation has begun explicitly going after the higher-ranked officials in Seongnam at the time, including Lee.

Like the Daejang project in 2015, the Wirye New Town development project in 2013 was carried out in a joint government-private format under the direction of the Seongnam Development Corporation (SDC).

The participants in the earlier project included the four main figures implicated in the Daejang scandal, among them former SDC planning headquarters chief Yoo Dong-gyu, attorney Nam Wook, and accountant Jeong Young-hak. This has sparked speculation that the Wirye project was a “dry run” for Daejang.

Hoban Construction’s office in Seocho District, Seoul on Aug. 31 (Yonhap)
Hoban Construction’s office in Seocho District, Seoul on Aug. 31 (Yonhap)

Another similarity between the projects is that they both happened at a time when Lee Jae-myung was mayor of Seongnam.

“It looks as though they’re scrutinizing similarly structured projects from the bottom in an effort to go after Lee Jae-myung,” said one chief prosecutor at a prosecutors’ office in the greater Seoul area.

Indeed, the investigation team also conducted searches and seizures the same afternoon on the cells of Yoo, Nam, and former journalist Kim Man-bae, who are currently imprisoned in Seoul Detention Center for their role in the Daejang scandal. Prosecution insiders suggested they may have been searching for evidence that they coordinated their stories at a time when the investigation is reopening.

Observers in and around the prosecutors are also taking notice of the fact that the third anti-corruption investigation division of the Seoul Central District Prosecutors’ Office — which is in charge of the reopened investigation into the Daejang matter — is also embarking on a full-scale investigation of Wirye New Town.

Chief prosecutor Kang Baek-sin, who is viewed as a junior member of President Yoon Suk-yeol’s team, was in charge of investigating former Justice Minister Cho Kook during Yoon’s time as prosecutor general.

In July, the Daejang reinvestigation team acquired new materials from SDC. With the first investigation team having already acquired related materials last year, the move is being seen as part of a process of reexamining the case from the beginning.

The first investigation team indicted the four main Daejang figures and others on charges of breach of trust for causing at least 65.1 billion won in losses to SDC by designing a project profit distribution structure that favored private participants. It did not manage to uncover any links to the city of Seongnam or Lee Jae-myung, who had been mayor at the time.

The same day, the anti-corruption and economic crime investigation team at the Gyeonggi Nambu Provincial Police Agency, which has been investigating allegations of the misappropriation of a Gyeonggi Province corporate credit card, referred Lee’s wife Kim Hye-gyeong and a former Gyeonggi Provincial Office Level 5 government employee surnamed Bae to prosecutors on charges of breach of professional duty and violation of the Public Official Election Act.

Kim is accused of knowingly allowing Bae to use the corporate card to pay for personal meals over a period from July 2018 to September 2021, when Lee was governor of Gyeonggi Province.

The amount spent in connection with Kim was reportedly around 2 million won (US$1,480).

Early on Wednesday morning, the Suwon District Court dismissed a request for Bae’s arrest warrant, concluding that the “need for arrest cannot be seen as having been established.”

By Jeon Gwang-joon, staff reporter; Kang Jae-gu, staff reporter

Please direct questions or comments to [english@hani.co.kr]

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