Seongnam City Development Corporation Launches Lawsuit for 'Unjust Profit Return' in Daejang-dong Case

Former Head Yudonggyu Reapplies for Copy of Indictment... Legal Advisory Group Formation Also to Be Completed This Week

Aerial view of Daejang-dong, Seongnam-si, Gyeonggi Province /

[Asia Economy Reporter Baek Kyunghwan] Seongnam Urban Development Corporation (Seongnam UDC) is preparing to file a lawsuit against the private developers of Daejang-dong. While focusing on securing the indictment of former Planning Headquarters Director Yoo Dong-gyu, they have also begun forming a legal advisory group in earnest. Seongnam UDC plans to finalize the scope of the lawsuit after discussions with Seongnam City once the indictment is obtained.

According to the legal community on the 17th, Seongnam UDC applied to the Seoul Central District Court the day before to copy the indictment of former Director Yoo. They had previously applied once on the 11th, but it was confirmed that the application was partially revised due to a change in representation following President Yoon Jeong-su’s resignation.

Currently, Seongnam UDC regards former Director Yoo and private developers such as Hwacheon Daeyu as accomplices in breach of trust, having gained an unfair profit of 179.3 billion KRW. Having confirmed collusion between Hwacheon Daeyu and the corporation’s officials during the conspiracy guideline stage, Seongnam UDC stated, "The corporation’s officials participated under the leadership of related parties from the private developers," and officially declared them as "joint perpetrators of breach of trust in the course of duty."

In particular, regarding the deletion of the additional profit distribution clause during the business agreement process, they stated, "There is no lawful or reasonable justification for deleting the additional profit distribution clause." The logic is that the private developers monopolized property benefits equivalent to excess profits, causing damage to the corporation, thereby constituting the crime of breach of trust in the course of duty.

However, the amount of breach of trust charges of 65.1 billion KRW plus alpha against Hwacheon Daeyu major shareholder Kim Man-bae and Cheonhwa Dongin No. 4 owner lawyer Nam Wook, as determined by the prosecution, shows a significant difference from the amount calculated by Seongnam UDC. Accordingly, Seongnam UDC decided to first secure former Director Yoo’s indictment to specifically understand the details and scale of the breach of trust charges.

Some raise the possibility that although Seongnam UDC applied to copy the indictment as a victim of breach of trust charges, there may be restrictions on securing the right to view it. This is because some key figures involved in the Daejang-dong development preferential treatment allegations are still working, and they appear in former Director Yoo’s indictment, making it difficult to regard Seongnam UDC solely as a victim. However, the court stated that "if the victim status and procedural and substantive requirements are met, there is no problem with copying the indictment," so Seongnam UDC is expected to secure the indictment as early as this week.

After obtaining the indictment, Seongnam UDC plans to discuss specific litigation plans with Seongnam City by synthesizing the legal advisory opinion from the law firm Sangnok, commissioned by former President Yoon, and additional reviews from external legal advisors. Currently, former Director Yoo faces charges including breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes and bribery after dishonest acts. The breach of trust charge involves allegations that he funneled land development dividends and substantial implementation profits to private developers, causing damage to the corporation.

To swiftly initiate a 'return of unjust enrichment' lawsuit, they plan to complete the formation of the legal advisory group within this week. The legal advisory group will finalize the scope and amount of the lawsuit by comprehensively reviewing former Director Yoo’s indictment and Seongnam UDC’s own assessment of the damage scale. The legal advisory group is likely to be centered around the law firm Sangnok, commissioned by former President Yoon.

However, it is expected to take some time before the full-scale lawsuit begins. This is because Seongnam City has separately decided to analyze former Director Yoo’s indictment, and since significant costs will be incurred for hiring lawyers and court fees, approval from the Seongnam City Council and Seongnam City is essential. A Seongnam UDC official said, "Since securing the indictment and council approval will take time, we will quickly complete the lawsuit preparations through cooperation with the legal advisory group," adding, "We will not take a defensive stance in the return of unjust enrichment or damages lawsuit."

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