The Korea Herald


Lee shifts blame for corruption, takes credit for project

Land development scandal takes center stage in Gyeonggi Province audit

By Ko Jun-tae

Published : Oct. 18, 2021 - 15:15

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Gov. Lee Jae-myung of Gyeonggi Province attends a parliamentary audit at the provincial government’s office in Suwon on Monday. The placard reads “recipient of money = culprit, sharer of stolen property = thief,” in an implicit denial of allegations surrounding a land development project in Seongnam, Gyeonggi Province. (Yonhap) Gov. Lee Jae-myung of Gyeonggi Province attends a parliamentary audit at the provincial government’s office in Suwon on Monday. The placard reads “recipient of money = culprit, sharer of stolen property = thief,” in an implicit denial of allegations surrounding a land development project in Seongnam, Gyeonggi Province. (Yonhap)
Gyeonggi Province Gov. Lee Jae-myung on Monday continued to praise himself for his role in a controversial land development project while distancing himself from any alleged corruption, and attacked the opposition bloc for undercutting his milestone achievement.

The leading presidential candidate representing the ruling Democratic Party said Monday that he was the chief officer responsible for the land development project in Daejang-dong, a neighborhood within Seongnam, Gyeonggi Province, when he was mayor of the city from 2014 to 2018.

The comment was made during the annual audit of the Gyeonggi provincial government held Monday in Suwon, Gyeonggi Province. Lee’s presence has effectively turned the audit into a parliamentary hearing on Lee as a presidential candidate.

Lee asserted that the Daejang-dong development project was the largest publicly driven development project, turning a profit of around 500 billion won ($422 million), or 70 percent. But lawmakers on Monday criticized Lee for acknowledging only his accomplishments, not his missteps.

“Gov. Lee Jae-myung is the one who approved the Daejang-dong project, but he has only claimed credit for accomplishments and asserts he was ‘unaware’ of illegal acts that were ‘beyond his expectations,’” said Rep. Lee Eun-ju of the minor opposition Justice Party.

Rep. Lee asserted that Gov. Lee’s project in Daejang-dong had loopholes built in so that private investors could make unreasonable profits, as there was no clause in the investment contract requiring private sector investors to return excess profits from the project.

The public development project, run by the Seongnam city government, also failed to produce affordable rental housing units or cap prices on the resulting units, both of which are crucial for any publicly driven apartment development projects, she said.

“The retrieval rate of development profit was low, and no price cap was in place, effectively turning the project into one that assured the largest amount of profits for private developers,” Rep. Lee added.

The only “misdeed” that Gov. Lee acknowledged was “mismanaging personnel placement and that some of my staff members under my command were polluted and involved in the corruption.”

During the audit, Gov. Lee commented that he felt a sense of betrayal toward Yoo Dong-gyu, former acting president of Seongnam Development, who has been arrested in connection with the case. Yoo was in charge of land development projects in Seongnam when Gov. Lee was mayor.

Gov. Lee asserted that those involved in the scandal must be severely punished, vowing to ensure that those involved are appropriately penalized if he becomes president.

But he has made clear that he is not to blame, as he was never directly involved with the corruption even though he was the top supervisor and the chief elected official in charge of the project.

Rep. Lee and other opposition lawmakers joined forces to grill Gov. Lee over his suspected involvement as the mastermind behind the rigged investment plan and whether he unlawfully favored close aides.

The controversy centers on Hwacheon Daeyu Asset Management, a company that participated in the project with a 1 percent stake but later earned immense dividends and real estate profit from its involvement.

Gov. Lee is at the center of the controversy, as many question whether he knowingly permitted and approved construction work for the project while giving favors to Hwacheon Daeyu and other close aides.

Rep. Kim Do-eup of the People Power Party accused Gov. Lee of being the top controller of how funds were spent on the land development project.

“It doesn’t matter if ‘he’ has the money in his own pocket,” Kim said during the audit, quoting from a recorded phone conversation between two key suspects in the case. “If ‘he’ exerts influence as ‘he’ wishes to use that money however he likes it to be spent, that effectively is his money.”

Who that “he” referred to is a key question, as an unnamed person presumably in high authority was mentioned in the conversation.

In the recorded phone call, Hwacheon Daeyu owner Kim Man-bae can be heard denying that he is the owner of one of the asset management firm’s seven affiliates, and saying half of the affiliate in question belongs to the unnamed person. Rep. Kim and opposition lawmakers have claimed the unnamed person is Gov. Lee.

The Gyeonggi Province governor has denied the allegation, arguing he was never the real owner of Hwacheon Daeyu and he would never have done anything to benefit his opposition.

“If I was the real owner of Hwacheon Daeyu and if I really had that money, I would throw that money to a dog on the street rather than give even a penny to the son of Rep. Kwak Sang-do.”

Kwak’s 32-year-old son received unusually high severance pay after working full-time at Hwacheon Daeyu for seven years. Kwak gave up his membership in the People Power Party on concerns that the allegations could harm the opposition bloc’s prospects ahead of the presidential election.

“The culprit of this corruption is who took the money,” Gov. Lee added, pointing a finger at the People Power Party.

For Gov. Lee, as the presidential candidate representing the ruling Democratic Party, the Monday audit served as an opportunity to clear his name and remove a major obstacle to his bid for president. The election is scheduled March 9.

The investigation into the case has gained steam, with the prosecution detaining a key partner in the scandal immediately upon his arrival from the United States for questioning over bribery and other allegations.

Nam Wook, who was detained at Incheon International Airport on Monday morning, is a figure believed to hold key clues about how Hwacheon Daeyu took part in the Daejang-dong project.

He joined the project as a private partner then, earning around 100.7 billion won through his company after investing less than 88 million won.