A Week After the Suspicion... Can Evidence of Secret Use and Nominee Transactions Be Found?

First Test of Guksubon's Investigation Capability
Securing Computer, Communication, and Account Details is Key
Considerable Time Passed After Allegations Raised
Questionable if Evidence Can Be Secured
Opposition: "Prosecutors Must Be Allowed to Investigate"

Farmers affiliated with the National Peasants' Federation Busan-Gyeongnam Federation held a performance on the 8th in front of the main gate stone marker of the Korea Land and Housing Corporation (LH) headquarters in Chungmugong-dong, Jinju-si, Gyeongnam, hanging a banner that read "LH Korea Farmland Speculation Corporation." [Image source=Yonhap News]

[Asia Economy Reporters Lee Gwan-ju and Gu Chae-eun] The police, who hold the reins of the investigation into the speculation allegations involving employees of Korea Land and Housing Corporation (LH), launched a full-scale investigation on the 9th by conducting searches and seizures at LH headquarters and employees' residences. This marks the first test of the police's investigative capabilities just three months after the establishment of the National Investigation Headquarters (NIH) under the National Police Agency following this year's adjustment of investigative authority. However, concerns are widespread that despite the large-scale operation of the investigation team, the case may end in a 'flash in the pan.' This is because there are numerous issues to resolve, including punishment, recovery of illicit gains, and verification of nominee transactions.

◆The core is to prove ‘use of insider information’= The key focus of this search and seizure is to secure evidence to determine whether LH employees used insider information when purchasing land in the Gwangmyeong-Siheung New Town area. The legal basis for the police investigation itself lies in the 'prohibition of use of business secrets' clause specified in the current Act on the Prevention of Corruption and the Establishment and Operation of the Anti-Corruption and Civil Rights Commission (Anti-Corruption Act) and the Special Act on Public Housing. The Anti-Corruption Act stipulates that public officials who use secrets learned during their duties to obtain property or financial benefits may face imprisonment of up to seven years or a fine of up to 70 million won.

However, if an employee without experience in the relevant department denies this, it is entirely up to the police to prove it. To demonstrate whether the employee under suspicion had access to insider information or obtained such information through various means, securing computer records and communication data is essential. Choi Seung-ryeol, head of the Special Investigation Team for Real Estate Speculation Offenders established within the NIH, said, "If it looks like speculation, we must secure evidence and interrogate accordingly," adding, "When they claim speculation is investment, breaking that claim is the investigative capability."

◆Can nominee transactions be uncovered?= Another set of materials to be secured through the search and seizure includes suspects' mobile phone communication records and account transaction details. This is because nominee transactions conducted not only under the LH employees' own names but also through family, relatives, and acquaintances must be uncovered. The key to identifying nominee transactions is tracing the flow of money, and the necessary data for this are communication records and account transaction details.

However, the fact that this search and seizure was conducted a considerable time after the initial allegations were raised is a cause for concern. To prevent evidence destruction, swift initial investigation is crucial. Although a search and seizure was anticipated from the moment the case became known, the warrant was executed only after a week, allowing suspects to buy time. Currently, the police must apply to the prosecutor, who then requests the court to issue a warrant. This is why cooperation between the police and prosecutors for warrant issuance is considered as important as the police's investigative capabilities.

Nam Gu-jun, Chief of the National Police Agency's National Investigation Headquarters (NIH), is entering the Government Seoul Office in Jongno-gu, Seoul, on the morning of the 8th to report to Prime Minister Chung Sye-kyun. The National Investigation Headquarters of the National Police Agency is in charge of overseeing the investigation into allegations of speculative investment in new towns by employees of the Korea Land and Housing Corporation (LH). Photo by Kang Jin-hyung aymsdream@

◆Will the ‘determined’ police prove their investigative capabilities?= The NIH has organized a Special Investigation Team for Real Estate Speculation Offenders and is concentrating its investigative power on this case. Especially since this is the first major case attracting social attention after the reorganization of power institutions and the government has fully backed the police, a strong investigative will and an energized atmosphere are evident. A police official said, "The police have accumulated considerable know-how through ongoing investigations into real estate speculation offenders," adding, "There is a strong will to properly demonstrate investigative capabilities this time and realize a ‘responsible investigation system.’"

The police have deployed the Major Crime Investigation Division (formerly the Special Investigation Division), known as the police's ‘sharpest blade,’ to the investigation team, keeping open the possibility of direct investigation at the NIH level. This reflects the intention to conduct thorough investigations directly by the NIH rather than through provincial police agencies if necessary. The NIH is also discussing establishing a reporting center staffed by investigative experts within the police and personnel from the National Tax Service. When calling the 182 call center, reports will be connected to this center, where police and National Tax Service personnel will provide consultation. If investigation is needed, the report will be immediately forwarded to the relevant provincial police agency. Among the 18 provincial police agencies nationwide, 15 are also instructed to actively support the ‘LH allegations’ investigation.

◆Opposition criticizes exclusion of prosecution, citing government and regime issues= Despite the government's and police's all-out investigation and inquiry, the opposition is escalating its offensive by demanding prosecution investigations, parliamentary audits, Board of Audit and Inspection audits, and an apology from former President Moon Jae-in. On the same day, Seong Il-jong, a member of the People Power Party, said on a radio broadcast, "(The ongoing) investigation does not have authority such as search and seizure," and added, "It should be allowed for the prosecution to investigate." Joo Ho-young, floor leader of the People Power Party, said the day before, "No matter what conclusion this regime reaches, the public will not trust it," demanding prosecution investigations and parliamentary audits.

On the other hand, the ruling party emphasizes the government's all-out investigation and legislative response. Kim Jong-min, Supreme Council member of the Democratic Party of Korea, said on a radio broadcast, "There are claims that the prosecution is excluded, but the prosecution currently has a dedicated LH team conducting cooperative investigations," adding, "We are mobilizing all government investigative capabilities to engage in a full-scale investigation system." Kim Tae-nyeon, floor leader of the Democratic Party, also officially announced at the first meeting of the Central Election Countermeasures Committee the day before that the LH speculation prevention law will be prioritized as the top bill in the March National Assembly session.

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