[Exclusive] Byeon Chang-heum Appears in Jang Ha-won’s Second Indictment... Lobbying Suspicion Over SH Rental Housing Purchase Review

Southern District Prosecutors' Office 'Discovery Fund Scandal' Second Indictment Released
First Trial for Jang Ha-won’s Second Prosecution Case to Open on the 30th

It has been confirmed that the second indictment of Jang Ha-won, CEO of Discovery Asset Management, contains circumstances indicating lobbying related to the purchase review of rental housing while former Minister of Land, Infrastructure and Transport Byun Chang-heum was serving as the president of Seoul Housing and Communities Corporation (SH).

According to the indictment submitted by the Ministry of Justice to the office of Jeong Jeom-sik, a member of the National Assembly's Legislation and Judiciary Committee from the People Power Party, on the 29th, CEO Jang conspired with two former directors of Discovery Asset Management to create a real estate fund with investor money in 2018 and then invested it in SH's purchase rental housing project.

In return, CEO Jang was given the opportunity to acquire 25% of the developer's shares, and the two former directors were each offered 5% of the shares. This occurred during the tenure of Jang Ha-sung, CEO Jang's older brother, as the Blue House Chief of Policy.

The Joint Investigation Unit on Financial and Securities Crimes of the Seoul Southern District Prosecutors' Office (Chief Prosecutor Ha Dong-woo) viewed the actions of the three individuals involved in fund management (CEO Jang and the two former directors) as violations of the Act on the Aggravated Punishment of Specific Economic Crimes (acceptance of bribes) and indicted them all on December 14 last year.

Former Minister of Land, Infrastructure and Transport Byeon Chang-heum / Photo by Jang Jin-hyung aymsdream@

However, at that time, the prosecution also indicted a person named Yoon on charges of violating the Act on the Aggravated Punishment of Specific Economic Crimes (mediation of bribery) and the Attorney-at-Law Act, in addition to the three individuals. Yoon is a figure who supported the current Democratic Party's presidential election campaigns in 2002 and 2007 and currently works at an institution under a local government in the Chungcheong region.

According to the prosecution's findings, CEO Jang's involvement in the SH purchase rental housing project dates back to March 2018. At that time, CEO Jang met Mr. A, who was preparing the SH purchase rental housing project, through Yoon's introduction at a location in Vietnam. The prosecution stated in the indictment that CEO Jang decided to invest after saying, "There is fund money that can be used freely without reporting the usage to investors."

The prosecution's view is that CEO Jang judged the project to be one that could stably yield about 10% returns relative to the investment without significant risk, invested the fund money, and decided to personally acquire a portion of the profits generated from the project, demanding a share of the project revenue distribution.

The prosecution also believes that Yoon played a role in Mr. A's full-scale launch of the SH purchase rental housing project. In October 2016, Yoon met with Mr. A and others at a hotel coffee shop in Seoul and said, "I know the SH president well," and expressed his intention to "try to ensure that the SH rental housing purchase review passes," according to the prosecution.

Jang Ha-won, CEO of Discovery Asset Management. [Image source=Yonhap News]

At that time, the SH president was former Minister Byun Chang-heum, who served as Minister of Land, Infrastructure and Transport under the Moon Jae-in administration. The prosecution believes that in November 2016, Yoon actually met former Minister Byun at the SH president's office in Gangnam-gu, Seoul, to request the approval of the purchase review. Furthermore, in January 2017, Yoon is alleged to have received bribes along with a request to "meet SH executives and employees to ensure the SH purchase review passes," leading to charges of violating the Attorney-at-Law Act.

However, former Minister Byun told Asia Economy in a phone interview that he "does not know Yoon well" and that he "has never been contacted or investigated by the prosecution regarding this matter."

On the other hand, Yoon, who was indicted last December along with CEO Jang and others on charges of mediation of bribery under the Act on the Aggravated Punishment of Specific Economic Crimes and violation of the Attorney-at-Law Act, admitted in a phone interview with Asia Economy that he met former Minister Byun and CEO Jang.

However, Yoon claimed his innocence, stating, "It was not mediation but rather joint business while handling government relations." He said, "While working in politics, I often attended policy seminars with former Minister Byun and was acquainted with him. I do not deny meeting President Byun, but if I had recognized it as a crime, would I have done it while paying taxes and enrolling in the four major social insurances?"

Regarding the so-called "Discovery incident," which caused a large-scale suspension of redemptions amounting to about 250 billion won in April 2019, the prosecution indicted CEO Jang twice. The circumstances related to the charges surrounding the "SH purchase rental housing project" were newly revealed during the reinvestigation process and were not included in the first indictment in July 2022. The first trial related to the second indictment is scheduled to be held on the 30th.

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