Prosecutors arrest key suspect in Seongnam land development scandal
SEOUL, Oct 01 (Yonhap) – A key figure in the land-use planning snowball scandal in Seongnam, just south of Seoul, was arrested on Friday for questioning over allegations that the governor of Gyeonggi Lee Jae-myung, the leading presidential candidate for the ruling Democratic Party, has given business favors to some developers.
Yoo Dong-gyu, former acting chairman of Seongnam Development Corp., was apprehended by prosecutors at a hospital on Friday morning and taken to the Seoul Central District Prosecutor’s Office. He was invited to appear before prosecutors before 10 a.m. but requested that his appearance be delayed by several hours due to his suspected health problems, court officials said.
Yoo, reported by some media as having a close relationship with Lee, was allegedly deeply involved in a controversial land development project in Daejang district of Seongnam launched in 2015, when the governor was the city’s mayor.
In recent weeks, Lee has come under increasing scrutiny over accusations that he has granted business favors to Hwacheon Daeyu Asset Management, the main investor in the Daejang District Development Project. The allegations pointed to a possible personal connection between Lee and the project, from which Hwacheon Daeyu, with a combined capital of 350 million won (US $ 297,063), reaped colossal gains of more than 400 billion won in dividends.
Yoo is believed to play a key role in shaping the shareholding composition and profit allocation method of Seongnam Park Co., the main developer of the Daejang project, in a way that benefits Hwacheon Daeyu, l ‘one of the shareholders of the company.
The media also raised questions about the personal relationship between Lee and Haecheon Daeyu owner Kim Man-bae, claiming that Kim, a former journalist, had previously interviewed Lee as mayor of Seongnam in 2014.
Yoo is also suspected of owning one of the Daejang Project investment companies and receiving money from Hwacheon Daeyu. Yoo was appointed head of the Gyeonggi Tourism Organization after Lee was elected governor of the province, suggesting he was one of the governor’s confidants.
According to prosecution sources, an accountant and investor in the Daejang project has provided tapes that detail Yoo’s demand for a portion of Hwacheon Daeyu’s dividends and discussions of potentially illicit money payments. They said the accountant named Jeong Young-hak, who owns a subsidiary of Hwacheon Daeyu, submitted 19 tapes of conversations between Yoo and Kim. The tapes reportedly contain discussions of a suspicious expenditure of 8 billion won from company funds, among others.
Lee has denied all of the allegations, including reports of his close relationship with Yoo.
Yoo also denied allegations that Hwacheon Daeyu received any money.
Prosecutors, who raided Yoo’s home and Hwacheon Daeyu’s office earlier this week, questioned senior officials from Seongnam Development Corp., which oversaw the Daejang development project.