"Allegations of Speculation Worth 10 Billion KRW by LH Executives on 7,000 Pyeong Land in Gwangmyeong-Siheung (Comprehensive)"

Minbyun and People's Solidarity Press Conference
Purchase of 7,000 Pyeong Across 10 Plots Over 3 Years

[Asia Economy Reporter Jo Gang-wook] A controversy is expected to arise as allegations have been raised that employees of Korea Land and Housing Corporation (LH), the project implementer, purchased land worth over 10 billion won in advance in the Gwangmyeong-Siheung district of Gyeonggi Province, which was additionally designated as the 3rd phase new town in the Seoul metropolitan area.

The Lawyers for a Democratic Society (Minbyun) and the People's Solidarity for Participatory Democracy (PSPD) held a press conference on the 2nd and announced that they received a report to Minbyun’s Civil Life Committee that LH employees purchased land in the Gwangmyeong-Siheung district for speculative purposes, and upon verification, they confirmed the purchase. The Gwangmyeong-Siheung district, announced as a new town candidate site by the government on the 24th of last month, is planned to have 70,000 households on a 12.71 million square meter site, making it the largest among the 3rd phase new towns.

14 LH Employees and Their Families Purchased Land Separately Over 3 Years

Minbyun and PSPD revealed that after analyzing the land registry, 14 LH employees in the metropolitan area and their spouses and families purchased land in the planned Gwangmyeong-Siheung district separately from April 2018 to June 2020.

The land they purchased consists of 10 parcels totaling 23,028 square meters (6,965 pyeong) in the Gwarim and Mujinae-dong areas of Siheung City within the district, with the purchase amount estimated to be in the 10 billion won range, Minbyun added. It is estimated that 5.8 billion won of the purchase funds came from loans from financial institutions, with loans concentrated at a specific financial institution, according to Minbyun.

In particular, the land they purchased is farmland (jeondap) distributed mainly in the designated new town area, where compensation or land-for-land compensation (a method of compensation with land instead of cash) can be received once development begins.

Minbyun stated, "To purchase farmland, a farming plan must be submitted, but it would be difficult for LH employees to farm simultaneously," and argued, "This can be seen as a speculative purchase with false or exaggerated plans submitted."

Kim Tae-geun, chairman of Minbyun’s Civil Life Economic Committee, said, "After the announcement of the designation of the Gwangmyeong-Siheung district on the 24th of last month, we received reports that LH employees purchased land in the area for speculation, and after checking the land registry of the area, we confirmed circumstances where several LH employees divided and purchased shares of the land."

Minbyun also added that employees from a specific regional headquarters were not only joint owners of the purchased land but also purchased land in the area simultaneously with their own names, spouses, or acquaintances around the same time.

LH Employees in Charge of Compensation Work... Signs of 'Subdivision and Tree Planting' Immediately After Purchase

Many of the employees suspected of speculation are known to be involved in compensation work at LH. In particular, some parcels were subdivided immediately after purchase, which is presumed to be a sign that they acted with knowledge of the compensation method, such as ensuring that shareholders hold more than 1,000 square meters. According to LH’s internal compensation regulations, shareholders holding 1,000 square meters qualify for land-for-land compensation. Minbyun also reported that there were signs of large-scale tree planting on farmland purchased by employees as soon as the area was announced as a new town target.

Seo Seong-min, a lawyer from Minbyun’s Civil Life Economic Committee, said, "If the investigation scope is expanded to include family or acquaintances under their names besides the land in question, the scale of purchases could be much larger," and demanded, "A full investigation of acquisition dates and acquisition circumstances should be conducted for Ministry of Land, Infrastructure and Transport officials and LH employees owning land throughout the 3rd phase new towns."

Minbyun and PSPD judged that since the acts likely violate the duty to prevent conflicts of interest under the Public Officials Ethics Act and the prohibition on using business secrets under the Anti-Corruption Act, thorough investigation and punishment are necessary for public institution employees who pursue private interests using internal development information, and announced that they will file a public interest audit request with the Board of Audit and Inspection.

Lee Kang-hoon, executive committee member of PSPD’s Civil Life Hope Headquarters, said, "These acts by LH employees correspond to the crime of using business secrets punishable by up to seven years imprisonment or a fine of up to 70 million won under the Anti-Corruption Act," and added, "The Board of Audit and Inspection must conduct a thorough audit to fully investigate the circumstances of their pre-speculation acts, and the Ministry of Land and LH must transparently reveal the causes and details of the failure to properly manage and supervise."

Ministry of Land to Conduct Full Investigation... LH Also Investigating Facts

LH has started fact-finding through its own investigation. An LH official said, "Regarding the development of the Gwangmyeong-Siheung new town, we are currently verifying the facts about allegations that employees purchased land using internal information," and added, "We will actively cooperate if related agencies conduct investigations in the future."

The Ministry of Land also decided to conduct a full investigation into land purchases in the Gwangmyeong-Siheung new town targeting LH following these allegations.

A Ministry of Land official said, "We plan to first ascertain the facts of the situation," and added, "If illegal activities are found, we will take measures such as requesting an investigation."