Prosecutors conduct raid in Yongsan project probe
By Chung Ah-young
Huh Joon-young
Prosecutors raided the office and home of a close aide to Huh Joon-young, former president of the Korea Railroad Corporation (Korail), Tuesday, investigating allegations of the creation of a slush fund involving a now-scrapped urban development project on the state-run rail operator’s land in Yongsan, central Seoul.
A dozen investigators from the Seoul Central District Prosecutors’ Office seized contracts, account books, internal reports and computer hard drives from the office and home of the aide, surnamed Sohn, in Seoul.
Prosecutors said that they recently found fresh evidence of corruption involving Sohn’s company while investigating the case against Huh.
Residents in Yongsan and Korail’s subcontractors related to the failed project filed a complaint against Huh last year for breach of trust and bribery.
The investigation is focusing on Huh, who headed Korail between 2009 and 2011 before the project was canceled.
Investigators said that they detected evidence that Huh allegedly pressured the project contractors to place orders through Sohn’s waste disposal company and Sohn allegedly created the slush fund.
Samsung C&T, the main developer of the project, placed orders worth 12.7 billion won with Sohn’s company, although it was small and had no prior experience in waste disposal.
Suspicions are that the order was made at Huh’s request, as Samsung C&T initially opposed placing orders with the firm.
Prosecutors are looking into whether Sohn bribed Huh in exchange for business favors and created the slush fund for him.
They plan to summon Sohn soon, while Huh too will face questioning.
Later in 2010, Samsung C&T withdrew from its role as the lead contractor in the project due to a financial dispute with Korail, and Lotte Tour Development took over.
The complainants claimed that Huh offered favors to Lotte in making the contract, resulting in losses worth 1 trillion won to Korail.
The project, proposed in 2006, was deemed Korea’s largest property development project, transforming a former rail yard and surrounding neighborhood near a key railroad station into an international business district at a total cost of 31 trillion won.
Dubbed Yongsan Dreamhub, it was originally designed to include a large international complex of offices, malls, hotels and apartments on a 566,800-square-meter lot.
But the plan was officially cancelled in 2013, after a seven-year struggle with financial difficulties resulted in a failure to repay a 5.2 billion won loan, killing the project.
Huh stepped down from his post at Korail in 2011 to run in the general election.
Prior to his Korail post, he served as the nation’s police chief. He now serves as president of conservative NGO the Korea Freedom Federation (KFF).