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[Editorial] Self-investigation

Land minister effectively prejudges case of alleged speculation by LH employees at ministry’s development sites

In response to allegations that employees of the state-run Korea Land & Housing Corp. speculated on property in government-designated development areas, President Moon Jae-in ordered the creation of an interagency investigation team.

Civic groups had accused the LH employees of using development information to speculate on land designated as part of the government’s ambitious “new town” project, which is the third of its kind.

Six agencies participated in the team under the supervision of the Prime Minister’s Office, but the Ministry of Land, Infrastructure and Transport is leading the inspection because it manages nationwide real estate data.

But now the land minister has effectively prejudged the case. Land, Infrastructure and Transport Minister Byeon Chang-heum reportedly said Thursday that the employees had not known of the development plans beforehand and that they also did not stand to profit. He said he thought they might have bought the land in question without knowing it would be developed.

However, 13 LH employees and members of their families bought land in Gwangmyeong and Siheung, both in Gyeonggi Province, southwest of Seoul, when the corporation was internally reviewing candidate locations for the project. The two sites near the capital were later selected as new towns. The individuals in question purchased about 23,000 square meters of farmland for about 10 billion won ($8.9 million). They took out as much as 5.8 billion won in loans from a Nonghyup Bank branch for the land purchase. They planted trees, apparently anticipating compensation when the government takes the property under eminent domain. It is unconvincing to argue they knew nothing about the development prospects of the land they bought and that they did not stand to profit. Investigations have not begun in earnest.

They bought the land in question when Byeon was chief executive officer of LH. It is hard for him to avoid responsibility as the head of the corporation. It is possible that he has denied the allegations because he wants to go scot-free. People already doubt that the team will be able to show the matter in its true light because one of those who should be investigated is leading the investigation. He even presumes to know the outcome of the probe.

The investigation team embarked on the examination of all the LH employees and all the Land Ministry officials. However, criticism surfaced that staff of the presidential office, lawmakers and their aides, and city councilors were excluded from the investigation. Then Moon instructed the team to probe all of the presidential office staff members and their families.

When allegations were raised over sites for the second new town project, designated in 2003, 27 government officials were found to have profited from speculation at those sites. At that time, the prosecution led the investigation. A similar discovery might have happened again. But this time, the prosecution and the Board of Audit and Inspection are being kept out of the investigation.

Lee Nak-yon, chairman of the ruling Democratic Party of Korea, told an intraparty inspection panel to determine whether any of its lawmakers, their aides, local government heads or their families were involved in land transactions related to the third new town project. But it is questionable if the results of the party’s investigation will be reliable at face value.

The government seeks to complete the investigation quickly, probably to calm public anger ahead of the April 7 Seoul and Busan mayoral by-elections. But if new allegations are raised after the investigation results are announced, public opinion will worsen.

The investigation must be objective and fair. If the government wants to settle controversy over the self-investigation and gain public trust, it must change the principal investigator from the ministry to the audit board or the prosecution. If needed, it must accept a parliamentary audit. It ought to put in sufficient time and human resources to increase the objectivity and reliability of the investigation.

Moon once talked up Byeon, calling his policy to increase the LH-led public housing supply the “Byeon Chang-heum trademark.” But the market is reluctant to join the LH-led public development. The alleged land speculation by LH employees is amplifying the market’s distrust of the policy. The government should take this opportunity to review the development model.