[Asia Economy Reporter Koo Chae-eun] Lee Jae-myung, Governor of Gyeonggi Province, strongly denied the allegations regarding the 'Daejang-dong Development Project,' calling it the "greatest achievement during his tenure as Mayor of Seongnam." He directly criticized the Chosun Ilbo, which reported the allegations, telling them to "stay out of the Democratic Party primary and the presidential election."
He added, "'Baseless slanderous reports' constitute defamation of candidates as defined by the Public Official Election Act," and urged, "Remember the media's obligation of election neutrality, report with integrity, and stop interfering in the primary and presidential elections."
On the afternoon of the 14th, Lee held a press conference at the National Assembly Communication Office, stating, "The Daejang-dong development was originally a private development project expected to generate thousands of billions of won in profits, but after becoming Mayor of Seongnam, it was converted into a public development project by Seongnam City." Lee explained, "The prime greenbelt area between Bundang and Pangyo, Daejang-dong, was under development pressure, and the Korea Land and Housing Corporation (LH) had confirmed public development. However, in 2009, private developers bribed several hundred million won to the younger brother of Assemblyman Shin, affiliated with the People Power Party (then Saenuri Party), and former LH officials to lobby for 'abandoning public development.'"
He said that the assemblyman pressured the LH president to abandon public development during the 2009 year-end audit, and in June of the following year, public development was abandoned. After winning the local election in June and becoming Mayor of Seongnam, Lee changed the project to 'Seongnam City public development.' Lee stated, "Based on the belief in public recovery of unearned development profits, about 550.3 billion won of the Daejang-dong development profits were recovered for Seongnam City."
He explained that Seongnam City, which decided on public development, could not raise over 1 trillion won for land acquisition costs, so its affiliate, Seongnam Urban Development Corporation, invited private developers through a public offering, established a Special Purpose Company (SPC), and proceeded with the development project through it. The consortium led by Hana Bank (Hana Bank, Industrial Bank of Korea, Kookmin Bank, Tongyang Life Insurance, Hana Asset Trust), which guaranteed the recovery of development profits worth about 550.3 billion won, was selected as the private participant. The SPC named 'Seongnam Uteul' was established with 50% minus one share invested by the private participants and 50% plus one share by Seongnam Urban Development Corporation.
'Hwacheon Daeyu,' which is under suspicion of preferential treatment, is an asset management company created by the investors and is one of the shareholders of 'Seongnam Uteul' along with Seongnam Urban Development Corporation and five other investors. Lee explained, "Since the private developers bore full responsibility for financing, development work, and sales disposal, and assumed 100% of the loss risk, Seongnam City recovered development profits worth about 550.3 billion won solely through exercising its permit authority without investing a single won or bearing any risk." He also said that, judging the participants' profits were too high, an approval condition was added requiring the developers to implement infrastructure outside the project area that should have been funded by Seongnam City's budget, securing an additional 92 billion won in profits for Seongnam City.
Regarding claims that Seongnam City designated a specific developer through a private contract, Lee said, "They argue as if the problem is that a new company was created, but according to relevant laws, an asset management company must be newly established," adding, "The actual owners of the asset management company are decided by agreement among the investors and are undisclosed, so I have no knowledge of the details."
Earlier, Chosun Ilbo reported that 'Hwacheon Daeyu,' which joined the consortium implementing the Seongnam Daejang district development project during Lee's tenure as mayor, received dividends exceeding 50 billion won over three years with a capital of 50 million won, raising suspicions that the owner of the company received preferential treatment due to ties with Lee. Lee responded, "They cite the fact that both the special purpose company’s related company name (Cheonhwa Dongin) and Lee Jae-myung's political goal (Daedong Sesang) contain the character 'Dong' as evidence of a connection. They also misled by saying that a reporter who interviewed me later became the CEO of Hwacheon Daeyu, implying a connection."
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