'Seongnam FC Allegations' Transferred to Prosecutors Without Disclosing Use of Sponsorship Funds (Comprehensive Report 2)

Investigation Results Submitted to Prosecutors After 7 Months
Lee Jae-myung Faces Third-Party Bribery Charges
Doosan Construction Land Use Changed
50 Billion Won Donation Recognized as Quid Pro Quo

Part of Donation Paid as Performance Bonus
"No Evidence Found of Funds Going to Lee's Side"

Lee Jae-myung, Leader of the Democratic Party of Korea / Photo by Yoon Dong-joo, doso7@

[Asia Economy reporters Seongpil Cho and Sehee Jang] The police investigating the 'Seongnam FC sponsorship fund allegations' handed over the results recognizing charges against Lee Jae-myung, leader of the Democratic Party of Korea, to the prosecution on the 13th. It has been seven months since the prosecution requested supplementary investigation in February. However, it is reported that the police ultimately failed to resolve all suspicions regarding the use of the sponsorship funds, which had been the focus of their investigation.

According to a comprehensive report by this outlet, the Anti-Corruption Economic Crime Investigation Unit of the Gyeonggi Southern Provincial Police Agency announced that they handed over the investigation conclusion applying the charge of bribery by a third party under the Special Act to the prosecution regarding Lee. The police also notified the prosecution that one Seongnam city official faces the same charge as Lee, and former Doosan Construction CEO Lee was found guilty of bribery. A police official stated, "This is the result of reviewing materials obtained through voluntary and compulsory investigations during the supplementary investigation process and analyzing various precedents."

The police are known to have judged that Doosan Construction’s payment of approximately 5 billion KRW in sponsorship funds to Seongnam FC was a bribe in exchange for changing the use of hospital land it owned in 2015 to office facilities and reducing the area to be donated from 15% to 10%. Earlier, Seongnam City approved the change of use for the hospital land, promised through a business agreement in July 2015 during Lee’s tenure as mayor, in November of the same year.

Doosan Construction provided a total of 5.3 billion KRW in sponsorship funds to Seongnam FC, starting with 2 billion KRW in 2016, followed by 2.2 billion KRW in 2017, and 1.1 billion KRW in 2018. Prior to this, Doosan Construction had only donated about 300 million KRW to Seongnam FC in March 2015. After the approval of the land use change, the annual sponsorship amount increased by up to seven times. Doosan Construction built a new headquarters on the changed land and ceased separate sponsorship payments from 2019, when Lee left for the Gyeonggi Province governor position.

[Image source=Yonhap News]

This investigation result contrasts with the Bundang Police Station in Gyeonggi Province’s decision last September not to indict Lee due to insufficient evidence. The Bundang Police Station concluded a no-charge decision after investigating for three years and three months since June 2018, following a complaint by the Bareunmirae Party during the 2018 local elections. Subsequently, the complainants filed an objection to the police investigation results, and the case was transferred to the prosecution. The prosecution requested a supplementary investigation, and the police began reinvestigation in February this year.

Initially, the supplementary investigation was handled by the Bundang Police Station. At that time, the Bundang Police Station received support from five investigators from the higher Gyeonggi Southern Provincial Police Agency and focused on tracing the flow of funds and whether there was quid pro quo in the Seongnam FC sponsorship funds. During this process, it was confirmed that Doosan Construction sent an official letter to Seongnam City in October 2014 stating, "If the land use is changed to allow building a new headquarters on the hospital site, we will sponsor Seongnam FC." In relation to this, the police conducted a surprise raid on Seongnam FC and Doosan Construction headquarters in May and reportedly found documents proving Lee’s charges while analyzing the secured materials. Around this time, the case was transferred to the Gyeonggi Southern Provincial Police Agency, which concluded the investigation on this day.

However, the police reportedly failed to clarify the use of the sponsorship funds. The police had focused their investigation on the unclear use of sponsorship funds received by Seongnam FC from companies such as Doosan Construction. The investigation stemmed from suspicions that some of the sponsorship funds were laundered and used as election funds for Lee. If the investigation revealed that Lee or his associates withdrew funds, charges of embezzlement could have been applied. These suspicions were also specified in the complainants’ objection letter.

The appearance of the Gyeonggi Nambu Police Agency

In fact, the police examined the use of funds through materials secured during the May raid and confirmed that part of the sponsorship funds was paid as performance bonuses. However, it was judged that the performance bonuses were not problematic as they were paid according to Seongnam FC’s revenue performance bonus policy, which allows up to 20% bonuses to employees and public officials who contributed to attracting sponsorship funds.

A police official said, "(Regarding the use of sponsorship funds) we tracked accounts thoroughly but found no evidence that funds flowed to the Seongnam mayor’s side," adding, "We also conducted multifaceted investigations, including account tracking, on performance bonuses received by people called associates, but similarly found no indications that funds flowed to the Seongnam mayor’s side." Previously, Seongnam FC had refused to disclose who and how much performance bonuses were paid to, despite requests from the Seongnam City Council and others.

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