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Kwak Sang-do, a former lawmaker with the People Power Party indicted on charges of receiving bribes for helping with the development project in the Daejang neighborhood of Seongnam, appears at the Seoul Central District Court in Seocho District on Feb. 8 for his hearing. (pool photo)

Kwak Sang-do, a former National Assembly member with the People Power Party (PPP), was acquitted in his first trial on charges of accepting billions of won in bribes from private developers in Seongnam’s Daejang neighborhood in the form of severance pay for his son.

This was the first court judgment on an indictment since allegations of preferential treatment in the Daejang development project first surfaced in September 2021. In addition to sparking accusations of a slipshod investigation by prosecutors, it is also likely to have an impact on the investigation into the so-called “5 billion won club.”

Judge Lee Jun-cheol of the 22nd criminal division of the Seoul Central District Court found Kwak not guilty Wednesday on charges of acceptance of property through mediation and bribery.

Also acquitted was Kim Man-bae, a majority shareholder in the asset management company Hwacheon Daeyu who was indicted on charges on bribe-offering and embezzling.

But the court also found Kwak guilty of violating the Political Funds Act for accepting 50 million won in illegal political funds from attorney Nam Wook and sentenced him to a fine of 8 million won and 50 million won in forfeit. Nam himself was given a fine of 4 million won.

The court clearly indicated that the 5 billion won in purported severance funds that Kwak’s son received was suspicious in nature.

“If we take into account Mr. Kwak’s son’s age and experience, his health status as objectively verified by a healthcare institution, and his rank and duties at Hwacheon Daeyu, [the severance payment] as unusually excessive based on the commonly accepted social understanding,” the court said.

It went on to conclude that the payment had the potential to be viewed as a bribe to Kwak himself. It also concluded that the payment bore connections to Kwak’s duties at the time of the severance payment to his son in April 2021, in that as a member of the PPP special investigation committee on real estate speculation, he had the authority to raise allegations about collusion between private developers and the Seongnam Development Corporation.

“There are circumstances present that raise questions as to whether Mr. Kwak’s son received funds, gifts, profits or bribes as a proxy,” the court said.

But it ultimately acquitted Kwak of the charges, concluding that the large payment of 5 billion won could not be viewed as having been delivered to Kwak himself.

“There does not appear to be any evidence suggesting that even a portion of the bonus deposited in the son’s account that accepted the payment was paid to Mr. Kwak or used for his benefit,” it explained.

“If we consider factors such as the fact that Mr. Kwak does not bear legal responsibility to support a son who is a married adult sustaining an independent livelihood, it was not proven that Mr. Kwak received the funds directly,” it said. In effect, the acquittal was based on the fact that the son was of age and maintaining an independent livelihood.

With the court exonerating Kwon of major charges in the first indictment in connection with the Daejang scandal, the prosecutors appear likely to face criticisms for the inadequacies of their investigation and public prosecution.

“The prosecutors moved too quickly to go to trial without investigating thoroughly enough early on,” commented one attorney and former chief prosecutor.

“This acquittal appears to have been a combination of the court being too conservative in its judgment and the prosecutors having done a half-baked job of investigating,” they added.

Kwak indicated that he planned to appeal the judgment on Political Fund Act violation charges.

The prosecutors said there were “aspects of the court’s acquittal decision that are difficult to accept,” adding that they planned to “carefully analyze the ruling and proactively appeal it.”

The acquittal decision Wednesday also appeared likely to sap momentum from investigations into other allegations concerning the so-called “5 billion club,” which had been effectively on ice apart from Kwak’s case.

“I think the prosecutors are going to be a lot more cautious in their examination of the remaining ‘5 billion club’ cases,” predicted one attorney and former superintendent public prosecutor.

By Choi Min-young, staff reporter; Jeong Hye-min, staff reporter; Son Hyun-soo, staff reporter

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