Focus on confirming alleged breach of trust
Prosecutors need to focus on proving breach-of-trust charges raised against a former ranking official of the Seongnam Development Corp. (SDC), to get to the bottom of a corruption scandal surrounding a 2015 urban development project in Seongnam City, south of Seoul. They should also conduct a thorough investigation in order to confirm the allegation that Lee Jae-myung, the presidential candidate of the ruling Democratic Party of Korea (DPK), might have played a role in the scandal.
On Thursday, the prosecution arrested two key suspects in the corruption case. One is Kim Man-bae, owner of Hwacheon Daeyu Asset Management ― one of the major private partners of the development project in Seongnam's Daejang-dong. He faces charges of breach of trust and bribery. Kim allegedly colluded with Yoo Dong-gyu, former acting president of the SDC, in manipulating the public bidding procedure to have his firm selected as the private partner for the project. Kim is suspected of causing at least 65.1 billion won ($55.1 million) in losses to the municipal government by illegally reaping excessive profits.
In the process, Kim allegedly offered a huge sum of bribes to Yoo in return for business favors. Another key suspect is Nam Wook, a lawyer and private partner in the project. He is suspected of colluding with Yoo and Kim in deleting a clause in a contract with SDC which calls for a fair distribution of additional profits between the city-run firm and private developers.
The deletion made it possible for Hwacheon Daeyu and its seven affiliates to reap an estimated profit of 850 billion won, almost 1,000 times their initial investments. This, however, means that SDC sustained a huge loss. The prosecution initially estimated the loss at about 110 billion won, but it corrected the amount to a minimum of 65.1 billion won due to difficulties assessing the exact figure, opening the possibility of raising the sum afterwards.
Against this backdrop, SDC President Yoon Jeong-su made public a report Monday that Yoo and other SDC officials caused 179.3 billion won in losses to the development corporation in collusion with Kim and other private partners. This sum is much higher than the prosecution estimated. The report, based on the SDC's internal probe into the project, implies that breach-of-trust charges can be applied to Yoo and other suspects. As such, it can provide a clue that might prove DPK candidate Lee's alleged involvement in the case.
Lee, former Gyeonggi Province governor and Seongnam mayor, dismissed the report as groundless. But it is hard to accept his dismissal because he was the top decision-maker approving the development project. During a National Assembly audit of the provincial government last month, Lee said that he turned down a suggestion that an additional profit-sharing clause be included in the contract. He argued that no private companies would participate in such a project if they had to return additional profits to city coffers.
But we beg to differ. If Lee had included such a clause, the municipal authorities could have recovered a large portion of the excess profits arising from the project. He should realize that owners of the land and buyers of the new apartments also had to suffer considerable losses because of corrupt ties between city officials and the private firms. That's why the prosecution should go all-out to confirm Lee's suspected involvement.
Prosecutors need to focus on proving breach-of-trust charges raised against a former ranking official of the Seongnam Development Corp. (SDC), to get to the bottom of a corruption scandal surrounding a 2015 urban development project in Seongnam City, south of Seoul. They should also conduct a thorough investigation in order to confirm the allegation that Lee Jae-myung, the presidential candidate of the ruling Democratic Party of Korea (DPK), might have played a role in the scandal.
On Thursday, the prosecution arrested two key suspects in the corruption case. One is Kim Man-bae, owner of Hwacheon Daeyu Asset Management ― one of the major private partners of the development project in Seongnam's Daejang-dong. He faces charges of breach of trust and bribery. Kim allegedly colluded with Yoo Dong-gyu, former acting president of the SDC, in manipulating the public bidding procedure to have his firm selected as the private partner for the project. Kim is suspected of causing at least 65.1 billion won ($55.1 million) in losses to the municipal government by illegally reaping excessive profits.
In the process, Kim allegedly offered a huge sum of bribes to Yoo in return for business favors. Another key suspect is Nam Wook, a lawyer and private partner in the project. He is suspected of colluding with Yoo and Kim in deleting a clause in a contract with SDC which calls for a fair distribution of additional profits between the city-run firm and private developers.
The deletion made it possible for Hwacheon Daeyu and its seven affiliates to reap an estimated profit of 850 billion won, almost 1,000 times their initial investments. This, however, means that SDC sustained a huge loss. The prosecution initially estimated the loss at about 110 billion won, but it corrected the amount to a minimum of 65.1 billion won due to difficulties assessing the exact figure, opening the possibility of raising the sum afterwards.
Against this backdrop, SDC President Yoon Jeong-su made public a report Monday that Yoo and other SDC officials caused 179.3 billion won in losses to the development corporation in collusion with Kim and other private partners. This sum is much higher than the prosecution estimated. The report, based on the SDC's internal probe into the project, implies that breach-of-trust charges can be applied to Yoo and other suspects. As such, it can provide a clue that might prove DPK candidate Lee's alleged involvement in the case.
Lee, former Gyeonggi Province governor and Seongnam mayor, dismissed the report as groundless. But it is hard to accept his dismissal because he was the top decision-maker approving the development project. During a National Assembly audit of the provincial government last month, Lee said that he turned down a suggestion that an additional profit-sharing clause be included in the contract. He argued that no private companies would participate in such a project if they had to return additional profits to city coffers.
But we beg to differ. If Lee had included such a clause, the municipal authorities could have recovered a large portion of the excess profits arising from the project. He should realize that owners of the land and buyers of the new apartments also had to suffer considerable losses because of corrupt ties between city officials and the private firms. That's why the prosecution should go all-out to confirm Lee's suspected involvement.
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