All '3rd New Town' Sites Under Investigation for Preemptive Speculation... Key Issue Is Use of Insider Information

LH Employees Suspected of 10 Billion-Won Scale Speculation in Gwangmyeong-Siheung
'Key Issue Is Proving Use of Insider Information for Investment'
Government Embarrassed Over Public Development Plans to Increase Housing

The area around Gwarim-dong, Siheung-si, Gyeonggi-do (Photo by Yonhap News)

[Asia Economy Reporter Moon Jiwon] The government has decided to expand the scope of investigation regarding the allegations of advance speculation by employees of Korea Land and Housing Corporation (LH) in the Gwangmyeong-Siheung district to include the entire 3rd New Town development area. As public trust in the government's 'public' development has significantly declined due to this incident, the government plans to strictly scrutinize speculative activities using internal information by government and public institution employees.

However, since it is not easy to clearly distinguish between simple long-term investments in areas where development rumors have already spread and 'advance speculation' by internal employees, there is also an analysis that legal lawsuits to determine illegality will be inevitable in the future.

According to the government on the 3rd, the Ministry of Land, Infrastructure and Transport and LH have excluded 12 LH employees suspected of advance speculation in the Gwangmyeong-Siheung area from their duties and launched a full-scale investigation.

A Ministry of Land official said, "We plan to investigate the allegations of advance speculation by LH employees targeting the Gwangmyeong-Siheung district first, but we intend to expand the investigation to other 3rd New Town areas," adding, "If any illegal activities are found through future audits, we will respond strictly, including requesting investigations."

The reason the Ministry of Land is accelerating the investigation is due to concerns that this incident could shake the foundation of the 2·4 Supply Plan. The government plans to increase housing supply through new land and urban public development, but the market is already expressing dissatisfaction, saying that public institution developments cannot be trusted.

In the case of allegations of advance speculation by internal employees, whether internal information was used will be a key issue. Considering that the Gwangmyeong-Siheung district was already mentioned as a strong candidate for development over 10 years ago, there may be counterarguments that it was simple long-term investment rather than advance speculation by internal employees.

A government official explained, "It is understood that none of the employees currently under suspicion are related to the relevant work," adding, "In cases where employees are working in completely different roles, it is somewhat ambiguous to determine illegal acts, so careful verification through audits will be necessary."