Seoul City Strongly Drives 'Songhyeon-dong Site'... Korean Air Asks Anti-Corruption Commission to "Stop It"

No Bidders in First Round... Embarrassed Korean Air Files Grievance with Anti-Corruption Commission

Seoul City is promoting a plan to change the Korean Air site, currently an empty lot in Songhyeon-dong, Jongno-gu, into a 'Cultural Park' under urban planning facilities. The city announced on the 28th that it submitted the 'Songhyeon-dong Korean Air Site Park Decision Plan' for consultation at the Urban and Architectural Joint Committee held on the 27th. The decision plan includes changing the site, currently designated as a special planning zone within the Bukchon district unit plan, into a cultural park. The photo shows the Korean Air site in Songhyeon-dong, Jongno-gu, Seoul, which Korean Air is currently promoting for asset sale. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Yu Je-hoon] Korean Air has filed a grievance complaint with the Anti-Corruption and Civil Rights Commission in response to Seoul City's plan to convert the 'Songhyeon-dong site' into a park. This is a desperate measure taken due to Seoul City's push for the park conversion plan and low-price purchase of the Songhyeon-dong site, which is a core part of Korean Air's self-rescue plan.

Korean Air announced on the 12th that it submitted a grievance complaint application to the Anti-Corruption and Civil Rights Commission on the afternoon of the 11th, requesting a corrective recommendation or expression of opinion to halt the administrative procedures related to Seoul City's plan to convert the Songhyeon-dong site into a cultural park. This counterattack came just one day after the preliminary bidding for the Songhyeon-dong site failed. Previously, a total of 15 companies submitted letters of intent to participate in the bidding for the Songhyeon-dong site sale, but after Seoul City's intention to designate the site as a cultural park and forcibly acquire it became known, no companies participated in the bidding on the first deadline, the 10th.

Through the grievance complaint, Korean Air points out the illegality of Seoul City's urban planning changes and purchase policies. To designate the site as an urban planning facility, both general and individual necessity and public interest must be met, but there are already several other parks near the Songhyeon-dong site, and Seoul City's development plan is similar to Korean Air's existing utilization plan, thus failing both conditions.

Additionally, Korean Air raised concerns that Seoul City lacks the financial capacity to purchase the land and that, despite the principle of lump-sum compensation under the Land Compensation Act, Seoul City is preparing a plan for divided payments. Korean Air stated in the application, "Seoul City may delay the compensation payment timing to after 2022 by adjusting the construction start date," adding, "This could have a significant adverse effect on Korean Air's urgent liquidity needs."

Korean Air's filing of a grievance complaint with the Anti-Corruption and Civil Rights Commission regarding the Songhyeon-dong sale dispute is interpreted as a desperate measure. Seoul City plans to complete the park conversion plan within the year and proceed with purchase or acquisition, leaving Korean Air with few other options. Although administrative litigation is possible, confronting the government is burdensome, and it takes considerable time to reach a result.

However, corrective recommendations or expressions of opinion by the Anti-Corruption and Civil Rights Commission do not carry enforceability or legal effect. Even if Korean Air's opinion is accepted, it is uncertain whether Seoul City will immediately comply. An industry insider said, "For Korean Air, quickly selling the Songhyeon-dong site to secure liquidity is a top priority," adding, "Filing a grievance complaint with the Commission instead of pursuing administrative litigation indicates how urgent the situation is."

Korean Air stated regarding this matter, "We plan to proceed with the second bidding for the Songhyeon-dong site as originally planned, but considering the circumstances, it is not easy. We had no choice but to file a grievance complaint out of desperation," adding, "However, separately, we will maintain continuous cooperation with Seoul City and sincerely negotiate."

Meanwhile, some speculate that the unresolved sale of the Songhyeon-dong site could find a solution through the government's 'Corporate Asset Purchase Program.' The government decided at the Emergency Economic Central Countermeasures Headquarters meeting the day before to activate a 'KRW 2 trillion + α' scale corporate asset purchase program through Korea Asset Management Corporation (KAMCO) and others to ensure companies facing crises due to the COVID-19 pandemic can receive appropriate prices when selling assets.

Since the purpose of the government's program is 'appropriate price sales,' if Korean Air's Songhyeon-dong site sale case is included in this program, it could be better than selling to Seoul City. An industry official said, "For Korean Air, the best scenario is to raise the site price as much as possible through competitive bidding," adding, "Since the asset purchase program is unlikely to meet expectations in price assessment, Korean Air will also find it difficult to make a decision."

Reporter Yu Je-hoon kalamal@

This content was produced with the assistance of AI translation services.