The prosecution is showing signs of winding down its investigations in the Daejang-dong scandal.
The scandal stems from the unusual profit distribution scheme of a public-private partnership project to develop Daejang-dong in Seongnam, Gyeonggi Province, just south of Seoul. A few speculators realized astronomical rates of return from their modest investments in the project led by Seongnam Development Corp., a public enterprise funded by the Seongnam municipal government.
The prosecution on Monday added a breach of trust charge to Yoo Dong-gyu, then the chief of the corporation’s planning headquarters, who had already been indicted for allegedly taking bribes from one of the speculators.
It also indicted three other figures as Yoo’s breach-of-faith accomplices and requested pretrial detentions for them. Two speculators -- Kim Man-bae, the largest shareholder of small asset management company Hwacheon Daeyu, and Nam Wook, a lawyer who owns Cheonhwa Dongin No. 4, one of seven Hwacheon Daeyu affiliates -- were detained, while Jung Min-yong, former chief of the corporation’s strategy and business bureau, was not.
The prosecution is said to judge that it is difficult to press the breach-of-trust complicity charge against Lee Jae-myung, the ruling Democratic Party of Korea’s presidential candidate, who was Seongnam mayor when the project was designed and implemented.
The investigating team reportedly views that Lee did not pursue his private interest and that the scheme in question that secured only fixed profits for Seongnam Development, thus enabling speculators to reap huge excess profits, was a “policy decision.”
This is unconvincing.
The “private interest” reason is comparable to the indictment of the Korea Hydro & Nuclear Power Co. chief executive on breach-of-trust charges in the case of alleged profitability manipulation for the Wolsong No. 1 nuclear reactor, even without personal profit.
Regarding the Daejang-dong project, Hwacheon Daeyu’s Kim said that he and other investors just followed administration guidelines and the business policy set by “the man,” whom he would address honorifically. Though he won’t identify the man, few would deny that the man is Lee, who was Seongnam mayor at the time.
Kim probably remarked to the effect that nothing was wrong with the profit distribution scheme of the project. In other words, they did as Lee said. Lee, not Kim or others, was the person in charge who should be charged with breach of trust.
The prosecution reduced Yoo’s breach-of-trust amount greatly. When it detained him, it estimated the damage to Seongnam would reach into the hundreds of billions of won. When it first requested pretrial detention for Kim unsuccessfully, it reduced the sum to 116.3 billion won ($98.5 million) or more. In adding breach of trust to Yoo’s charges, it lowered his malfeasance damage sharply to a minimum of 65.1 billion won. Seongnam Development on Monday estimated its loss due to the scheme at 179.3 billion won.
This makes it hard for the prosecution to avoid criticism that it is scaling back the case.
It is questionable if the prosecution is trying to rule out Lee as one of the suspects.
The Seongnam city government, which supervises Seongnam Development, has the final say on issues related to the project. It could not have proceeded without the mayor’s approval of each issue.
Few would believe that Yoo alone designed and executed the profit distribution scheme unilaterally without prior consultation with the mayor.
The focus of the investigation lies in the breach of trust. After reviewing the scandal, Seongnam Development recently released a report that showed there were no legitimate or valid foundations to support controversial decisions. News media have revealed many allegations and documents that could point to Lee’s breach of faith.
However, the prosecution made no mention of Lee nor the Seongnam government in its indictment against Yoo on the additional charge.
An opinion poll found that 68 percent of respondents do not trust the prosecution’s investigations into the Daejang-dong scandal. If it conducts an improper investigation, the appointment of a special counsel will be inevitable. Prosecutors’ dereliction of duties will be brought to justice as well.
By Korea Herald (email@example.com