Daejang-dong 'Keyman' Yoo Dong-gyu Arrested... Who Is the Next Target?

Investigation into Privileges and Lobbying Gains Momentum... Likely to Expand to Current and Former Executives of Seongnam Urban Development Corporation, Hwacheon Daeyu, and Cheonhwa Dongin

[Asia Economy Reporter Bae Kyunghwan] With the detention of Yoo Dong-gyu, former Planning Director of Seongnam Urban Development Corporation, who is known to have designed the Daejang-dong development plan in Seongnam, Gyeonggi Province, attention is turning to the next targets of the prosecution. Former and current executives of Seongnam Urban Development Corporation, key figures of Seongnam-e Tteul and Hwacheon Daeyu, which were responsible for the implementation and asset management of the Daejang-dong project, are being mentioned, while the relationship between former Director Yoo and Gyeonggi Governor Lee Jae-myung is also under scrutiny.

According to the legal community on the 4th, Judge Lee Dong-hee of the Seoul Central District Court conducted a pre-arrest detention hearing (warrant review) the previous night for former Director Yoo, who is accused of breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes and bribery under the same act, and subsequently issued an arrest warrant. The judge cited concerns that Yoo might destroy evidence or flee. Previously, Yoo had ignored the prosecution's summons and was arrested.

The 'Daejang-dong Development Suspicion Special Investigation Team' of the Seoul Central District Prosecutors' Office, currently investigating the case, views Yoo's failure to include a clawback clause for excess profits in the shareholder agreement of Seongnam-e Tteul during the Daejang-dong development project as breach of trust. Due to this shareholder agreement, Seongnam Urban Development, which held the first-priority preferred shares with '50% + 1 share,' received only 183 billion KRW in dividends, whereas Hwacheon Daeyu and Cheonhwa Dongin 1 to 7, holding only 7% of shares, pocketed 404 billion KRW.

The investigation team is known to have detected signs of bribery based on a recorded file submitted by Jeong Young-hak, an accountant and the actual owner of Cheonhwa Dongin 5, an affiliate of Hwacheon Daeyu. Allegations have surfaced that Yoo received about 1.1 billion KRW from Hwacheon Daeyu and had an agreement to receive an additional 70 billion KRW in dividend profits as a reward for preferential treatment. However, Yoo's side stated, "While talking with Kim Man-bae, it was a joke about whether he could give it, and there was no actual promise or receipt."

Accordingly, the investigation team is expected to summon Kim Man-bae and other key figures to trace the flow of these profits.

Nam Wook, a lawyer known as the actual owner of Cheonhwa Dongin 4, an affiliate of Hwacheon Daeyu, who invested 87.21 million KRW and received 100.7 billion KRW in dividends, is currently reported to be in the United States but cannot avoid investigation. Nam is one of the figures who practically led the development project alongside former Director Yoo. The investigation team has already completed a search and seizure of Nam's office, known as the actual owner of Cheonhwa Dongin 4, which changed its name to NSJ Holdings, along with Hwacheon Daeyu, Seongnam Urban Development Corporation, and related residences.

The process of private operator Seongnam-e Tteul's involvement in the Daejang-dong development will also be examined. Yoo Mo, former Head of the Development Project Division at Seongnam Urban Development Corporation, directly participated in the evaluation. The evaluation was conducted through absolute and relative assessments, with former Director Yoo serving as the chairperson of the evaluation committee for the absolute evaluation and as the chairperson of the subcommittee for the relative evaluation.

The roles of other executives of Seongnam Urban Development Corporation who participated in the evaluation at that time are also drawing attention. Kim Mo, Head of the Development Project Office, and Jeong Mo, former Head of the Investment Project Team, are notable. Kim joined the Seongnam City Facilities Management Corporation in 2010 alongside former Director Yoo. Yoo and Kim first met when Yoo was the remodeling association president and Kim was the sales manager at Dongbu Construction. Another evaluation committee member, former Team Leader Jeong, is one year junior to lawyer Nam Wook, a key figure in the Daejang-dong development suspicion. After resigning from Seongnam Urban Development Corporation earlier this year, Jeong established a real estate development company called 'Yuwon Holdings' with former Director Yoo.

The prosecution has already conducted an investigation of Lee Mo, Development Section Chief 2 at Seongnam Urban Development Corporation. In 2015, as a team leader-level executive, Lee reportedly had a conflict of opinion with former Director Yoo over the profit distribution of the Daejang-dong development project. Lee argued to prevent excessive profits going to private operators and to increase Seongnam City's revenue, but Yoo opposed this.

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