[Daechang-dong Aftermath] Seongnam City Development Corporation Targeted in Investigation... Prosecution Seeks 'Third Party'

Prosecutors Expand Investigation to Figures Involved in Overall Business Plan... Likely to Focus on 'Seongnam-ui Tteul' Selection Process

Reporters are bustling at the Seoul Central District Prosecutors' Office in Seocho-gu, Seoul, on the 1st, where prosecutors arrested Yoo Dong-gyu, former Planning Director of Seongnam Urban Development Corporation and a key figure in the 'Daejang-dong Development Project Favoritism' suspicion, in the emergency room. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Baek Kyunghwan] The prosecution's investigation into the Daejang-dong development scandal in Seongnam, Gyeonggi Province is increasingly focusing on former executives of the Seongnam Urban Development Corporation. With Yoo Dong-gyu, the former head of the Seongnam Urban Development Corporation who is mentioned as the person responsible for the Daejang-dong development project, emerging as the key figure in the scandal, the prosecution plans to expand the investigation to surrounding individuals involved in the project at the time to accelerate fact-finding.

According to the legal community on the 1st, the prosecution has been coordinating summons schedules for former executives while analyzing materials secured during the Seongnam Urban Development Corporation raids conducted over two days starting on the 29th of last month. Once the analysis of the seized items is complete, the prosecution intends to narrow down suspects and summon them one by one. A source from the investigation team explained that due to the vast scope of the case, the investigation will expand to all individuals involved from the project planning stage to profit distribution.

The top priority suspect is undoubtedly former head Yoo, who was arrested abruptly on the same day. He is recognized as a key figure who designed the Daejang-dong development project as a public-private partnership from 2010, when Governor Lee Jae-myung was elected mayor of Seongnam, and led the selection of Hwacheon Daeyu as the private business operator. Since the Seongnam Urban Development Corporation commissioned the project, Yoo has been deeply involved, designing the shareholder structure of ‘Seongnam’s Garden’?the entity implementing the project?and the profit distribution method, allegedly granting preferential treatment to Hwacheon Daeyu. The prosecution has already completed raids on Yoo’s former office and residence.

Within the Seoul Central District Prosecutors’ Office’s dedicated investigation team, efforts are also underway to identify a third party. Considering that the scandal began with the involvement of a private business operator, individuals involved in the selection process of Seongnam’s Garden by the Seongnam Urban Development Corporation are likely to be primary targets. The evaluation process that selected the Seongnam’s Garden consortium as the preferred negotiator was completed in just one day, raising suspicions of a prearranged decision.

Yoo Han-gi, former head of the Development Business Division at Seongnam Urban Development Corporation who directly participated in the evaluation, is the first to be mentioned. The evaluation at the time consisted of absolute and relative assessments; Yoo served as the chairman of the evaluation committee for the absolute assessment and as the chairman of the subcommittee for the relative assessment. After being appointed chairman of the Pocheon Facilities Corporation, the predecessor of Pocheon Urban Development Corporation, in January 2019, Yoo is known to be promoting a development project similar to the Daejang-dong model in Pocheon.

Attention is also focused on whether the roles of other executives of the Seongnam Urban Development Corporation who participated in the evaluation will be revealed through the prosecution’s investigation. Kim Moon-gi, head of the Development Business Department, and Jeong Min-yong, former head of the Investment Business Team, are notable figures. Kim joined the Seongnam City Facilities Management Corporation in 2010 alongside former head Yoo Dong-gyu. It is known that Kim first met Yoo when Yoo was serving as the remodeling association president and Kim was the sales manager at Dongbu Construction.

Another evaluation committee member, former team leader Jeong, is a junior by one year at university to Nam Wook, a key figure in the Daejang-dong development scandal. After resigning from the Seongnam Urban Development Corporation earlier this year, Jeong established a real estate development company called ‘Yuwon Holdings’ with former head Yoo.

Notably, after the scandal surfaced, former team leader Jeong visited the Seongnam Urban Development Corporation on the 25th, apparently using Kim as a front, and was confirmed to have accessed internal documents. The legal community views this as inappropriate contact occurring just before the Daejang-dong preferential treatment investigation began.

The prosecution has already conducted an investigation of Mr. Lee, the head of the Development Division 2 at Seongnam Urban Development Corporation. In 2015, as a team leader-level executive, he reportedly had disagreements with former head Yoo over profit distribution issues related to the Daejang-dong development project. Lee argued that excessive profits were going to private business operators and that Seongnam City’s revenue should be increased, but Yoo opposed this.

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