Prosecutors and Police Launch Full-Scale Investigation... Will Hwacheon Daeyu's 'Pandora's Box' Open?

Attention on the Choice of the Corruption Investigation Office After Filing a Complaint

[Asia Economy reporters Choi Seok-jin, legal affairs specialist, and Jeong Dong-hoon] A full-scale investigation by the police, prosecution, and the High-ranking Officials’ Crime Investigation Agency is expected to begin soon, triggered by the police summoning Kim Man-bae, the major shareholder of Hwacheon Daeyu Asset Management Co., Ltd., who stands at the center of the ‘Daejang-dong development project preferential treatment’ suspicion case.

Hwacheon Daeyu has many legal professionals with close ties to Kim serving as advisors or executives of its subsidiary Cheonhwa Dongin, and political figures linked to the case, including Gwak Sang-do of the People Power Party and Won Yoo-chul, former leader of the Future Korea Party, are expected to increase, showing signs of expanding into a large-scale gate encompassing both the legal and political spheres.

On the morning of the 27th, the police, who had been conducting a preliminary investigation after receiving a request from the Financial Intelligence Unit (FIU) in April to verify Hwacheon Daeyu’s fund flows and account transaction details, summoned Kim as a witness for questioning.

The police are expected to conclude the preliminary investigation conducted over five months starting with Kim’s questioning and transition into a formal investigation system. Last week, the police prepared for a full-scale investigation by adding one team (five members) from the Crime Proceeds Tracking Investigation Team under the Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency. The police investigation will initially focus on Hwacheon Daeyu’s fund flows and allegations of embezzlement and breach of trust involving Kim and others.

The investigation into Hwacheon Daeyu’s distinguished advisory group and the involvement suspicions of Gyeonggi Province Governor Lee Jae-myung is expected to start first at the prosecution.

Hwacheon Daeyu’s advisory board included high-ranking former legal officials such as former Supreme Court Justice Kwon Soon-il, former Prosecutor General Kim Soo-nam, Special Prosecutor Park Young-soo, former Suwon District Prosecutor General Kang Chan-woo, and lawyer Lee Kyung-jae. Additionally, lawyers Nam Wook and Cho Mo, registered as directors of Hwacheon Daeyu’s subsidiaries Cheonhwa Dongin No. 4 and No. 6, are also legal professionals.

Kim, who has long worked as a legal journalist, is known to have had a particularly close relationship with Special Prosecutor Park. He was also close enough to former Prosecutor General Kim to have private meetings during Kim’s tenure. Within the legal community, it is believed that Kim became closer to high-ranking former legal officials through Park and Kim.

When Kim appeared at Yongsan Police Station that day, he responded to questions about these advisory members by saying, “There was no quid pro quo (for advisory fees),” and added, “They are brothers I liked. They have been great role models mentally and have given me a lot of psychological and mental advice as mentors.”

On the same day, Lee Jae-myung’s camp filed a complaint with the Seoul Central District Prosecutors’ Office against Representative Gwak, who concealed the fact that his son received severance pay, on charges of violating the Public Official Election Act and the Information and Communications Network Act.

Prior to this, the Public Investigation Division 1 is investigating a case in which People Power Party floor leader Kim Ki-hyun, Representative Yoon Chang-hyun, and candidate Jang Ki-pyo, who raised suspicions about Lee’s involvement, were accused of violating the Public Official Election Act and defamation under the Information and Communications Network Act.

Also, the Lawyers for Human Rights and Unification of the Korean Peninsula (Hanbyun) and others are expected to soon begin investigating the case in which former Supreme Court Justice Kwon Soon-il, who served as an advisor to Hwacheon Daeyu, was accused of bribery after the fact and other charges.

If the complaint filed by the People Power Party against Lee on charges of breach of trust under the Specific Economic Crimes Act is accepted, the prosecution will inevitably scrutinize the entire permitting process of the Daejang-dong development project.

Meanwhile, there is also interest in whether the High-ranking Officials’ Crime Investigation Agency (Gosucheo) will launch an investigation into these suspicions.

Currently, the National Council of Evicted Residents (Jeoncheolhyeop) has filed a complaint against Lee on charges of breach of trust under the Specific Economic Crimes Act with Gosucheo. Additionally, the civic group Judicial Justice Restoration Citizens’ Action (Sasaehaeng) plans to file a complaint on the 28th against Representative Gwak Sang-do of the People Power Party and his son, who received 5 billion won from Hwacheon Daeyu as severance pay, on charges of bribery under the Act on the Aggravated Punishment of Specific Crimes.

Since this project occurred while Lee was serving as mayor of Seongnam, cases related to Lee are not subject to investigation by Gosucheo under its governing law. However, since Representative Gwak and former and current judges and prosecutors fall under Gosucheo’s jurisdiction, Director Kim Jin-wook of Gosucheo must decide whether to investigate directly or transfer the case to another investigative agency.