Investigation into LH Speculation Allegations... Spotlight on the 'Son Hye-won Ruling'

"Not Security Material" Claim Rejected
Court Widely Recognizes 'Secret' in Ruling

[Asia Economy Reporters Seongpil Jo and Daehyun Kim] The core of the investigation into the allegations of speculation by employees of Korea Land and Housing Corporation (LH) in the Gwangmyeong and Siheung new towns in Gyeonggi Province, where the police have launched a forced investigation, is to determine whether land purchases were made using prior development information. Although it is too early to decide on prosecution, there is a notable court ruling related to this case in the legal community. It is the ruling on former lawmaker Son Hyewon, who was indicted for speculation in Mokpo and sentenced to imprisonment in the first trial. The legal community views the LH speculation allegations as an extension of this ruling.

Exterior view of the Korea Land and Housing Corporation (LH) headquarters in Chungmugong-dong, Jinju-si, Gyeongnam [Image source=Yonhap News]

LH Employees Violate Anti-Corruption Act

The 'LH speculation allegations' center on about 10 LH employees purchasing 7,000 pyeong of land before the selection of the Gwangmyeong and Siheung new towns. The police suspect that LH employees used internal information to buy land in the planned areas of Gwangmyeong and Siheung new towns. The search and seizure of LH headquarters on the 9th is also analyzed to be related to this.

Article 7-2 of the Anti-Corruption Act (Prohibition of Use of Official Secrets by Public Officials, formerly the Crime of Using Official Secrets) stipulates that "public officials shall not use secrets learned in the course of their duties to obtain property or financial benefits for themselves or third parties." Violations are punishable under Article 86 of the same law by imprisonment of up to 7 years or a fine of up to 70 million KRW.

However, to punish the LH employees, it must be confirmed that they improperly used information learned during their tenure. Since the designation of the new towns has already been publicly known through the media, if it is argued that the information does not qualify as a 'secret,' punishment would be difficult.

Former lawmaker Son Hye-won, who is on trial for purchasing real estate under a borrowed name after preemptively learning about Mokpo's 'urban regeneration project plan'
[Photo by Yonhap News]

The Court’s View on the Crime of Using Official Secrets

The courts broadly recognize 'secrets' in the crime of using official secrets. In a November 2006 ruling, the Supreme Court stated, "It is not limited to matters explicitly designated as secret by law or classified as secret, but includes matters that have become secret due to political, diplomatic, economic, or social necessity, as well as matters that objectively and generally are not known to the public and have considerable value."

The judgment on former lawmaker Son’s use of official secrets was also based on this Supreme Court ruling. In the first trial held last year at the Seoul Southern District Court, former lawmaker Son argued that "the Mokpo city urban regeneration project has been widely reported in the media, so the related documents are not so-called 'confidential materials.'" However, the court ruled, "From Mokpo city’s perspective, the urban regeneration strategic planning documents have considerable value in not being disclosed externally," and "it is reasonable to consider them as secrets under Article 7-2 of the Anti-Corruption Act."

Land in Mujinae-dong, Siheung-si, Gyeonggi-do, where allegations of land speculation by some LH employees in the Gwangmyeong-Siheung new town have been raised [Image source=Yonhap News]

High Possibility of Punishment at Present... However

The legal community believes that if it is confirmed that LH employees used information for speculation, they could be charged with the crime of using official secrets. There is sufficient possibility that information about the designated new town areas will be recognized as 'secret' until it is disseminated concretely to multiple parties.

Attorney Jaegwon Lee of Dongin Law Firm said, "Internal information is sometimes broadly recognized. Since the new town development information has not been disclosed, it is clearly a kind of internal secret." Attorney Junsung Jang of How Law Firm also said, "Since the Supreme Court has already interpreted the crime of using official secrets broadly, lower courts have no choice but to follow this precedent. If prosecuted, there is a high possibility of a guilty verdict."

However, whether the secret learned during work was used will likely be comprehensively considered based on the LH employees’ positions, duties, and scope of work at the time. The Supreme Court also ruled in January 2008 that "when a public official acquires real estate, the judgment should be made comprehensively considering the duties held at the time, motives and circumstances, relevance of the secret learned during work, and the source of funds."

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