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[Newsmaker] Ex-lawmaker’s home, Hana Bank head office searched in Daejang-dong scandal

Prosecutors push on with probe into alleged bribery, corruption as clock is ticking

Prosecutors move boxes of documents and materials seized during a raid on ousted lawmaker Kwak Sang-do on Wednesday. (Yonhap)
Prosecutors move boxes of documents and materials seized during a raid on ousted lawmaker Kwak Sang-do on Wednesday. (Yonhap)
South Korean prosecutors on Wednesday searched ousted lawmaker Kwak Sang-do’s home and former office as well as Hana Bank’s head office as they pressed on with an investigation into alleged bribery and corruption in the Daejang-dong land development scandal.

The raid on Kwak’s home and former office came around a week after Kwak was officially expelled from the National Assembly and lost his immunity from arrest on Nov. 11.

In early October, Kwak, who was affiliated with the main opposition People Power Party, offered to resign after his 32-year-old son was found to have received 5 billion won ($4.23 million) in severance pay in March after working for Hwacheon Daeyu for around six years.

Kwak is suspected of receiving bribes from Hwacheon Daeyu in the form of his son’s severance pay in return for offering assistance and business favors.

Prosecutors reportedly obtained circumstantial evidence and statements from key suspects and concerned persons that Kwak played a pivotal role in the establishment of the public-private development consortium led by Hana Bank.

In particular, Kwak is accused of exercising his political influence after the consortium risked collapse. Prosecutors believe the ousted lawmaker blocked an attempt to scuttle the Hana Bank-backed consortium at the request of Kim Man-bae, who is the largest stakeholder of Hwacheon Daeyu.

The consortium allowed astronomical profits generated from the Daejang-dong project to be redirected to Hwacheon Daeyu.

If the Hana Bank-led consortium foundered, the major stakeholders of Hwacheon Daeyu would have been excluded from the project and sustained significant losses.

Kwak has entirely denied the bribery allegations and his association with the corruption scandal. But last month, prosecutors froze 10 bank accounts belonging to his son to prevent the disposal of assets worth 5 billion won, suspected to have been illegally obtained.

On Wednesday, the head office of Hana Bank was searched as part of a probe into the real estate corruption scandal. 

Police also conducted a raid on a Hwacheon Daeyu office in Seongnam, Gyeonggi Province, and the home of Choi Yoon-gil, who was chairperson of the Seongnam City Council when an ordinance bill was passed to establish Seongnam Development Corp., which spearheaded the Daejang-dong project.

Choi is accused of receiving 3 billion won from Hwacheon Daeyu in return for taking the initiative in passing the bill.

The spate of search and seizure operations comes as prosecutors scramble to obtain substantive evidence to indict Kim Man-bae and Nam Wook before their detention period ends on Nov. 22.

With the clock ticking, prosecutors are also trying to put a figure on the losses Hwacheon Daeyu inflicted on the Seongnam City government in collusion with Yoo Dong-gyu, former acting president of Seongnam Development Corp.

The prosecution previously said Hwacheon Daeyu caused at least 65.1 billion won in losses, without stating a specific amount of damages caused by a negligent breach of duty.

Another key of the investigation is to identify the mastermind behind the real estate development project in Daejang-dong, a district within Seongnam, as it kicked off in 2015 when presidential hopeful Lee Jae-myung served as mayor of the city.

Prosecutors also are poised to look into alleged lobbying activities over the project by a group dubbed the “5 billion won club.” 

Eyes are turning to Wednesday’s search and seizure results, as Kwak is alleged to be one of multiple high-profile government officials who were promised 5 billion won in exchange for aiding Hwacheon Daeyu.

The prosecution expects to summon Kwak and grill him over the Daejang-dong project after analyzing the seized materials.

The probe into the Daejang-dong scandal has drawn public attention as the outcome could impact the presidential election next March. 

The ruling and opposition parties also continue to heat up debate surrounding the creation of an independent counsel investigation into the Daejang-dong scandal.

By Ji Da-gyum (