Although the Anti-Corruption Act is Utilized... The 'Forfeiture' Unconstitutionality Controversy Remains

Retroactive Legislation on Speculation Prevention Law Inevitable... Experts Say "Excessive Administration"

Prime Minister Chung Sye-kyun (center), Acting Leader of the Democratic Party Kim Tae-nyeon (right), and Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki are talking at the 4th High-level Party-Government Council held at the National Assembly in Yeouido, Seoul, on the afternoon of the 28th. The party and government discuss measures to block illegal activities such as expanding public officials' property registration and innovation plans including the reorganization of Korea Land and Housing Corporation (LH). Photo by the National Assembly Press Photographers Group

[Asia Economy Reporter Kangwook Cho] Although the government has defined public officials' speculation as ‘treason’ akin to pro-Japanese anti-national acts and decided to apply retroactive confiscation of profits from real estate speculation, controversy is expected over the application criteria and potential unconstitutionality. The plan is to make maximum use of existing laws and regulations such as the current Anti-Corruption and Civil Rights Commission Act (Anti-Corruption Act), but ultimately, retroactive legislation of the Speculation Prevention Act is considered inevitable.

According to the ‘Punishment and Recovery Measures for Real Estate Speculation Offenders’ announced by the government on the 30th, the government plans to recover up to five times the unfair profits gained from real estate speculation and forcibly dispose of farmland intended for speculation. With the cooperation of the National Assembly, a Conflict of Interest Prevention Act will also be enacted to fundamentally prevent public officials from pursuing private interests. If a public official gains unfair profits of 5 billion won or more by using undisclosed information, they will face life imprisonment or imprisonment for five years or more. Employees of Korea Land and Housing Corporation (LH) or public officials will face not only criminal punishment but also severe disciplinary actions such as dismissal or removal.

Regarding the retroactive confiscation of profits from public officials' speculation, the government plans to make maximum use of existing laws and regulations such as the current Anti-Corruption Act. This is a desperate measure to avoid anticipated constitutional controversies when enacting retroactive legislation. However, problems remain. Article 86 of the Anti-Corruption Act states that ‘employees or third parties who use confidential information related to their duties shall be punished by imprisonment for up to seven years or a fine of up to 70 million won, and the acquired property or financial benefits shall be confiscated or recovered.’ At first glance, it seems possible to confiscate unfair profits, but there is an interpretation that profits can only be recovered if a gain is realized through land compensation. If this is the case, confiscation of land from 20 LH employees under investigation for new town land speculation would be impossible. This is because land compensation has not yet been made, so ‘property or financial benefits’ have not occurred.

Also, to punish under the Anti-Corruption Act, it must be proven that the individual obtained information related to their duties and gained benefits. However, 13 LH employees who purchased land in the Gwangmyeong City area designated as the third new town did not directly handle land development work for the past five years, making it difficult to prove whether they used ‘confidential work information.’

This is why there are calls for ‘clear regulations’ rather than relying on the Anti-Corruption Act. The ruling party, the Democratic Party of Korea, has taken the stance that if it is difficult under current laws, they will confiscate criminal profits even through retroactive legislation of the so-called ‘Speculation Prevention Act,’ including recent amendments to the Public Housing Special Act and LH Act passed by the National Assembly plenary session. This means that speculation by public officials is regarded as an anti-state act on par with pro-Japanese anti-national acts. The ‘Special Act on the Recovery of Pro-Japanese Property,’ passed by the National Assembly in 2005, is a legislative case where retroactive application was recognized and was ruled constitutional by the Constitutional Court in 2011.

However, regarding retroactive legislation for the recovery of unfair speculative profits, constitutional controversies remain not only in the legal community but also within the National Assembly, so it remains to be seen whether it will materialize. Generally, applying legal provisions enacted after the time of the criminal act retroactively for punishment is considered unconstitutional. Setting the reference point for the retroactive application period, such as which new town it will cover, is also a matter of controversy.

Jinhyung Seo, president of the Korea Real Estate Society (professor at Gyeongin Women’s University), pointed out, “Retroactive recovery of unfair profits raises constitutional issues, and registering all public officials’ assets infringes on private property rights, which can be considered excessive legislation and excessive administration.”

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