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Moon orders probe of housing officials’ alleged property speculation

Damning allegations likely to deal a blow to government seeking to stabilize property market

President Moon Jae-in speaks during a State Council Meeting at the Blue House on Tuesday. (Yonhap)
President Moon Jae-in speaks during a State Council Meeting at the Blue House on Tuesday. (Yonhap)
President Moon Jae-in on Wednesday ordered an expanded, thorough investigation into allegations that staffers at the public housing development agency used internal information to make speculative property investments.

“The comprehensive investigation will be conducted by the Prime Minister’s Office and sufficient manpower will be mobilized with the help of the transport ministry to investigate the allegations thoroughly, leaving no stone unturned,” said presidential secretary Kang Min-seok, quoting Moon.

Moon also called for a police investigation if any unlawful activities were found.

The latest move will ramp up the probe of suspicious land purchases by former and incumbent officials at the transport ministry and the state-run Korea Land and Housing Corporation, as well as their family members, in areas in Gyeonggi Province where new towns are to be built.

The investigation was first launched to look into a group of officials at LH over allegations that they used internal information to buy plots of farmland in Gwangmyeong and Siheung before the government announced a major development plan there last week.

The two cities in Gyeonggi Province were announced as part of the government’s latest public housing development project, a scheme designed to supply new homes in the central region to cool down the skyrocketing apartment prices in Seoul and its surrounding cities. The plan will see some new 70,000 homes provided in the two areas alone.

Other cities previously announced include Namyangju and Hanam.

A total of 14 LH employees and their family members are accused of purchasing 23,028 square meters of farmland for some 10 billion won ($8.9 million) between April 2018 and June 2020, having taken out loans worth 5.8 billion won from financial institutions. Two of them are former employees while the rest have been suspended from their duties in the wake of the allegations.

The controversy comes amid growing criticisms that the government has failed to stabilize housing prices despite vowing to do so.

Conservative opposition People Power Party didn’t miss out on the opportunity to lambast the Moon administration, saying the scandal has undermined the government’s entire public housing policy. They also criticized Land Minister Byeon Chang-heum who sat as the CEO of LH between April 2019 and December 2020.

“To leave it to the land ministry and LH to look into the issue that took place while he was in charge is like setting a cat to guard the fish,” the opposition lawmakers said.

The allegations were first brought forward by civic groups People’s Solidarity for Participatory Democracy and Minbyun, an association of progressive lawyers, in a press conference on Tuesday morning.

“To buy farmland, you would need to submit a plan for farming, but it is hard to imagine LH employees doing farming while keeping their day job,” said lawyer Kim Nam-geun. “It can be seen that they have submitted false documents for land speculation purposes.”

Lawyer Seo Seong-min said “more similar cases” could be discovered if the new town projects in Gwangmyeong and Siheung are investigated, as well as properties purchased under the names of family members. The revelation was based on a tipoff about certain plots of land, which took them “one day” to look into, the group said.

By Yim Hyun-su (