Even with a joint government investigation... Difficult to recover LH land speculation funds

Up to 3 Years Difference Between Land Designation and Purchase
Hard to Prove Application of Public Officials Corruption Prevention Act
If Recovery Fails, Must Follow New Town Compensation Procedures
Opposition Party Considers Demanding National Investigation into Allegations
LH "Strict Measures if Illegal" Public Apology Statement

Members of the People Power Party's National Assembly Land, Infrastructure and Transport Committee inspected the site in Gwarim-dong, Siheung-si, Gyeonggi Province on the 4th in connection with allegations of speculative investment by LH Corporation employees. Photo by Yoon Dong-ju doso7@

[Asia Economy reporters Kangwook Cho, Chae-eun Koo, and Sunhee Son] Although suspicions of preemptive speculation worth billions of won by Korea Land and Housing Corporation (LH) employees in the Gwangmyeong-Siheung district are spreading rapidly, it is understood that it is realistically difficult to recover their profits or exclude them from compensation, raising expectations of controversy. The only way to confiscate financial gains is through the application of the Anti-Corruption Act, but proving this is not easy.

According to related ministries on the 4th, Prime Minister Chung Sye-kyun is expected to announce the launch of a government joint investigation team and investigation plan regarding speculation in the 3rd new town at a regular briefing that day. The investigation team will be composed mainly of the Prime Minister’s Office and employees from related ministries such as the Ministry of Land, Infrastructure and Transport. It is reported that Choi Chang-won, the 1st Deputy Minister of the Office for Government Policy Coordination, has been appointed as the head of the investigation team. Along with this, the government plans to expand the scope of punishable offenses related to speculation suspicions and prepare measures to prevent recurrence, while prioritizing immediate implementation through personnel regulations and other ordinances of public institutions. ▶Related article on page 3

However, legal circles and government insiders analyze that despite these measures, it is difficult to recover profits from the 13 LH employees suspected of speculation under current regulations. A public institution official explained, "If separate profit confiscation regulations cannot be applied, regardless of punishment, cash or land compensation will inevitably be made according to the new town compensation procedures."

In fact, the current Public Housing Special Act punishes the use of information obtained during work for purposes other than intended or providing/leaking it to others, but there are no separate profit recovery provisions. The Anti-Corruption Act stipulates confiscation of financial gains, but even its application is considered difficult by legal experts. The district designation process only began last month, but the employees’ land acquisition dates are all before June of last year, creating a time gap ranging from six months to as much as three years. Even if new regulations banning land transactions for new housing developments by related ministries, corporation employees, and their families are introduced, retroactive application is difficult.

The opposition party has decided to push for a national audit to uncover the truth behind this incident. Joo Ho-young, floor leader of the People Power Party, told Asia Economy in a phone interview, "We are reviewing the demand for a national audit," adding, "We will reach a conclusion within today." The People Power Party is expected to discuss submitting a national audit request, forming a special committee for the audit, and the scope and duration of the audit during a video members’ meeting that morning.

Meanwhile, land transactions in Garim-dong, Siheung City, where LH employees’ speculation suspicions arose, surged just before government housing supply policy announcements. According to analysis of the Ministry of Land, Infrastructure and Transport’s actual transaction price disclosure system by People Power Party lawmaker Kim Sang-hoon, there were 167 land transactions in the three months before the August 4th measures last year and 30 transactions in the three months before the February 4th measures this year in that area. Outside these periods, transactions were in single digits or nonexistent.