Investigation into Daejang-dong Allegations, Key Focus on Tracing Profit Destination... Prosecutors' Secured Recordings Likely to Be Decisive Clue

On the afternoon of the 29th, prosecutors who completed a search and seizure at Hwacheondaeu Asset Management office in Seongnam-si, Gyeonggi-do, are moving the seized items.

[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] As the prosecution, investigating allegations of preferential treatment in the Daejang-dong development project, has formed a dedicated investigation team and begun full-scale inquiries, a recorded conversation between key figures?including Kim Man-bae, the major shareholder of Hwacheon Daeyu, and Yoo Dong-gyu, former Planning Director of Seongnam Urban Development Corporation?has emerged as crucial evidence approaching the core of the allegations.

Since the police had already conducted an internal investigation into Hwacheon Daeyu’s financial flows for several months before the prosecution’s search and seizure, concerns remain about the limitations in securing meaningful evidence. The success of this investigation is expected to hinge on whether the true owners of Hwacheon Daeyu and its subsidiary Cheonhwa Dongin, as well as the final destination of the profits, can be identified.

On the 30th, the Seoul Central District Prosecutors’ Office’s “Daejang-dong Development Allegation Dedicated Investigation Team (led by Deputy Chief Prosecutor Kim Tae-hoon)” is analyzing the seized materials obtained during the previous day’s search and seizure and preparing to summon related individuals for questioning soon.

The investigation team conducted search and seizure operations for about 11 hours starting at 10 a.m. the previous day at Hwacheon Daeyu’s office in Seongnam, Gyeonggi Province, Seongnam Urban Development Corporation, the residences of Mr. Kim and former Director Yoo, and the office of Nam Wook, the true owner of Cheonhwa Dongin No. 4.

The dedicated investigation team, formed the day before, consists of 16 prosecutors, including all nine prosecutors from the Economic Crime Criminal Division, led by Chief Prosecutor Yoo Kyung-pil; three prosecutors from the Public Investigation Division 2, including Chief Prosecutor Kim Kyung-geun; one prosecutor from the Anti-Corruption and Violent Crime Cooperation Division; and three dispatched prosecutors, along with accounting analysis investigators from the Supreme Prosecutors’ Office.

As the case was already assigned, the Economic Crime Criminal Division is expected to lead the main investigation into Hwacheon Daeyu’s financial flows, while the Public Investigation Division 2 will handle the case in which the Lee Jae-myung camp filed defamation charges against opposition party lawmakers.

Once the analysis of the seized materials is complete, the investigation team plans to summon and question officials from Hwacheon Daeyu, Cheonhwa Dongin, and Seongnam Urban Development Corporation in sequence.

Through this investigation, the prosecution must clarify ▲whether preferential treatment occurred during the selection of the Daejang-dong developer and the project’s progress ▲the final destination of the enormous dividends and profits ▲allegations of lobbying involving political and government circles during the project ▲and the roles of high-ranking former officials, lawyers, and politicians who received substantial consulting fees and other economic benefits.

The opposition party raises the possibility of Lee Jae-myung’s involvement, arguing that the project took place while Lee was mayor of Seongnam, and that former Director Yoo, known as a close aide to Lee, served as acting president of Seongnam Urban Development Corporation and led the developer selection and profit distribution structure design. However, beyond Yoo’s alleged preferential treatment of Hwacheon Daeyu, Lee’s direct instruction or at least tacit approval must be separately proven for this to become an issue.

For legal figures such as former Supreme Court Justice Kwon Soon-il, who reportedly received high consulting fees and salaries from Hwacheon Daeyu; Special Prosecutor Park Young-soo, whose daughter purchased an apartment owned by Hwacheon Daeyu; and lawmaker Kwak Sang-do, whose son received a large retirement payment, the prosecution’s task remains to clarify through investigation whether these economic benefits were linked to quid pro quo roles.

Within the legal community, it is believed that since the police summoned Hwacheon Daeyu CEO Lee Sung-moon and major shareholder Kim before the prosecution began forced investigations, key evidence may have already been destroyed. Therefore, the 19 recorded files and other evidence recently submitted by accountant Jeong Young-hak, owner of Cheonhwa Dongin No. 5, are expected to provide important leads for this investigation.

These files reportedly contain conversations about the nominee ownership of Cheonhwa Dongin, methods of cashing out nominee shares, and lobbying circumstances involving former Director Yoo.

Attorney A, experienced in special investigations, said, “Lobbying funds are rarely transferred via bank accounts or checks; if handed over in cash and the involved parties keep silent, it becomes virtually impossible to uncover the truth. For the investigation to progress, someone on the inside must speak up, find evidence, and connect the dots.”

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