Additional Embezzlement Charges Against Yudonggyu... Prosecution Fails to Find 'Lee Jaemyung's Trace'

Possibility of Concluding Investigation on 'Daejangdong Team'... Unable to Secure Evidence on Changes to Excess Profit Recovery Clause

[Image source=Yonhap News]

[Asia Economy Reporter Baek Kyunghwan] The prosecution investigating the preferential treatment and lobbying allegations in the Daejang-dong development is likely to conclude the investigation at the so-called 'Daejang-dong team' level, including former Seongnam Urban Development Corporation (Seongnam Dogeong) Planning Director Yoo Dong-gyu. Although key figures such as former Director Yoo and Hwacheon Daeyu major shareholder Kim Man-bae have been charged with breach of trust, it has been confirmed that no link has been found to Lee Jae-myung, the Democratic Party presidential candidate (then mayor of Seongnam), who was the policy decision-maker.

According to the legal community on the 2nd, the Seoul Central District Prosecutors' Office's special investigation team for the Daejang-dong development allegations (led by Deputy Chief Prosecutor Kim Tae-hoon) additionally indicted former Director Yoo on breach of trust charges the day before. Arrest warrants were also requested for Kim, lawyer Nam Wook, owner of Cheonhwa Dongin No. 4, and lawyer Jeong Min-yong, former head of the corporation's strategic investment team, on charges of complicity in breach of trust.

Until now, breach of trust charges were regarded as the only step to confirm the higher-ups in the Daejang-dong preferential treatment and lobbying allegations. Earlier, the investigation team was criticized for a 'scapegoating investigation' because breach of trust charges were not applied when former Director Yoo was initially indicted while in custody, which is in the same context.

Although the investigation team revealed the 'breach of trust' card ten days after indicting former Director Yoo, some interpret this as the limit of the higher-level investigation already being set. The indictment against former Director Yoo included the allegation that "by granting various preferential treatments, a specific private company obtained land development dividend profits worth at least 65.1 billion KRW and considerable implementation profits, causing damage to the corporation," specifying the victim as Seongnam Dogeong rather than Seongnam City.

According to our investigation, even in the staggered raids on Seongnam Dogeong and Seongnam City Hall, no traces of breach of trust by candidate Lee, the policy decision-maker, were found. Earlier, at the end of September during the early stages of the Daejang-dong investigation, the team raided Seongnam Dogeong. However, according to officials from Seongnam City and Seongnam Dogeong, almost no direct reports to Seongnam City Hall were found from the Planning Headquarters where former Director Yoo worked.

The Daejang-dong documents approved by candidate Lee that the investigation team secured from Seongnam Dogeong amounted to only one case, such as 'approval of investment by other corporations.' Additional documents like 'project modification plans and implementation plan approvals' were also confirmed, but these were internal decisions of Seongnam Dogeong and far from the core controversy surrounding candidate Lee, namely the 'non-adoption of the excess profit recovery clause.'

No evidence was secured to confirm the process by which the excess profit recovery clause was omitted. On May 27, 2015, Seongnam Dogeong Development Project Team 1 proposed a method to separately distribute additional profits exceeding the private developer's suggested price per pyeong (14 million KRW) according to shares, but 7 hours later at 5:50 PM, the related clause was deleted. A preliminary review meeting for the agreement was held at 2 PM that day, attended by four people including the Strategic Business Team Leader, Deputy Director, Management Support Team Deputy Director, and Development Project Team 1 Leader, but it has been confirmed that no minutes of the meeting exist at present.

There is also no trace that the before-and-after process was reported to candidate Lee. According to Seongnam Dogeong's self-investigation results released the day before, profit distribution was initially included during the preparation of the public offering guidelines, but after reviewing internal documents, it is unclear through what discussion channels the confirmed profits were reflected in the public offering guidelines. Lawyer Jeong is suspected of having directly reported this to then Seongnam Mayor Lee Jae-myung in February 2015, but Lee's side stated that Jeong never reported directly and that only two to three joint meetings of working-level staff took place.

However, since all key figures in Daejang-dong are charged with breach of trust, there is an analysis that it is illogical to exclude candidate Lee, the decision-maker and approver of the Daejang-dong development, from breach of trust charges. According to Seongnam Dogeong's articles of incorporation, "matters concerning the disposal of the corporation's property or decisions on sale prices must be reported in advance to the Seongnam Mayor," meaning candidate Lee cannot be exempt from responsibility for approving the investments of the private developers who caused this incident.

The variable is whether arrest warrants will be issued for Kim, lawyer Nam, and lawyer Jeong. It is because securing recognition of breach of trust charges against the remaining key figures, including former Director Yoo, is necessary to establish a foothold to extend the investigation to higher-ups. The pre-arrest detention hearings (warrant hearings) for these individuals will be held on the 3rd at the Seoul Central District Court, divided into morning and afternoon sessions.

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