Prosecutors Summon CEO of Seongnam Eutteul, Developer in Daejang-dong Favoritism Allegations, for Investigation

Senior Researcher Yang Seok-jo recently protested to Prosecutor Shim Jae-cheol, head of the Anti-Corruption and Strong Crime Division, regarding the prosecution of Cho Kuk at the funeral hall for the father-in-law of a senior official at the Supreme Prosecutors' Office. Photo by Yonhap News

[Asia Economy Reporter Ryu Tae-min] The prosecution investigating allegations of preferential treatment in the Daejang-dong development project in Seongnam, Gyeonggi Province, summoned the CEO of Seongnam-e Deul, the company responsible for the development project, for questioning.

According to the legal community on the 17th, the dedicated investigation team of the Seoul Central District Prosecutors' Office (led by Deputy Chief Prosecutor Kim Tae-hoon) summoned Ko Jae-hwan, CEO of Seongnam-e Deul, this morning as a suspect and is currently questioning him.

Seongnam-e Deul is the special purpose company (SPC) established as the developer of the Daejang-dong project. It was founded in 2015 by a consortium led by Hana Bank, which included Hwacheon Daeyu Asset Management (Hwacheon Daeyu) and Cheonhwa Dongin 1 to 7. Seongnam-e Deul was established with a capital of 5 billion KRW, with 50% plus one share held by the public enterprise Seongnam Urban Development Corporation, and the remaining shares divided among five financial institutions including Hana Bank and Kookmin Bank (43%), SK Securities holding a specific money trust from Cheonhwa Dongin 1 to 7 (6%), and Hwacheon Daeyu holding about 1% each.

The largest shareholder, Seongnam Urban Development Corporation, received dividends of approximately 180 billion KRW, but Hwacheon Daeyu received 57.7 billion KRW, and Cheonhwa Dongin 1 to 7 received 346.3 billion KRW, totaling 404 billion KRW, sparking controversy over preferential treatment.

The National Central Council of Evictees filed a complaint with the prosecution last September against former CEO Ko, former Planning Director Yoo Dong-gyu of Seongnam Urban Development Corporation, former Strategic Business Director Jeong Min-yong, and others.

The prosecution formed a dedicated investigation team and began the investigation. Last month, they indicted major shareholder Kim Man-bae of Hwacheon Daeyu, lawyer Nam Wook, owner of Cheonhwa Dongin 4, and former Planning Director Yoo Dong-gyu on charges of breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes, believing they conspired. Investigation of co-conspirator former Director Jeong is ongoing.

Today, the prosecution is expected to question CEO Ko about the establishment and overall operation of Seongnam-e Deul and to probe allegations of involvement by so-called 'upper-level' officials at Seongnam City Hall and the Seongnam City Council.

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