Prosecutors Form 'Daejang-dong Special Investigation Team'... Simultaneous Raids, Travel Bans, and Summons Investigations Begin
[Asia Economy reporters Baek Kyunghwan and Jeong Donghoon] The prosecution, investigating allegations of preferential treatment in the Daejang-dong development project in Seongnam, Gyeonggi Province, has launched simultaneous raids on the offices and residences of individuals related to Hwacheon Daeyu. Following travel bans on key figures involved in the case, summonses for questioning have also begun. The existing investigation team has been doubled in size. A dedicated investigation team for Daejang-dong has been formed, and the police have also decided to summon related parties one after another to verify facts, focusing on the core of the case.
On the 29th, the Economic Crime Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Yoo Kyungpil) has been conducting raids since the morning on Hwacheon Daeyu’s office located in Seongnam, Gyeonggi Province, as well as the Seoul Gangnam office of lawyer Nam Wook, the owner of Cheonhwa-dongin No. 4, a key figure, and the office where former Seongnam Urban Development Corporation Planning Director Yoo Dong-gyu worked. The targets of the raids reportedly include the residences of Hwacheon Daeyu’s largest shareholder Kim Man-bae and former Director Yoo, as well as the residences of the actual owners of Cheonhwa-dongin Nos. 2 to 7.
A 'dedicated investigation team for the Daejang-dong development allegations' has also been formed. The Seoul Central District Prosecutors' Office announced that under the leadership of Deputy Chief Prosecutor Kim Tae-hoon, the team consists of all prosecutors from the Economic Crime Division (Chief Yoo Kyungpil and eight prosecutors), three prosecutors from the Public Investigation Division 2 (Chief Kim Kyung-geun and two prosecutors), one prosecutor from the Anti-Corruption and Violent Crime Cooperation Division, three dispatched prosecutors, and accounting analysis investigators from the Supreme Prosecutors' Office, and that they have begun direct investigations.
This follows the approval by Justice Minister Park Beom-gye of Prosecutor General Kim Oh-soo’s request to form a special investigation team. Minister Park explained, "Rather than a special investigation headquarters, it is a combination of the Public Investigation Division 2 and the Economic Crime Division of the Seoul Central District Prosecutors' Office," adding, "The Prosecutor General’s will to investigate the truth specially and swiftly was immediately approved."
According to our confirmation, the investigation team is coordinating the targets and schedule of the investigation focusing on Hwacheon Daeyu, which holds 1% of the shares of Seongnam Eutteul, the Daejang-dong development project operator, and the individuals behind Cheonhwa-dongin Nos. 1 to 7, who hold 6%. A team official stated, "Considering the vast number of people involved and the connections to already reported cases, the investigation will effectively cover the entire process before and after the development."
Proactively, travel bans have been imposed on several individuals, including former Planning Director Yoo Dong-gyu of Seongnam Urban Development Corporation, who acted as the interim president from 2015 to 2018 and oversaw the entire Daejang-dong development project. The investigation team plans to summon former Director Yoo and others soon to verify the selection process of the Seongnam Eutteul consortium and the background of the profit-sharing structure design between Seongnam Urban Development Corporation and private developers.
Accounting professional Jung Young-hak, the actual owner of Cheonhwa-dongin No. 5 and a key figure who designed the Daejang-dong development alongside lawyer Nam, has already completed a witness interview. It was confirmed that Jung, together with Nam, purchased surrounding land and persuaded landowners at the end of 2009 aiming for private development, while the Korea Land and Housing Corporation (LH) was promoting public development of Daejang-dong. During the investigation of Jung, the team reportedly secured recorded phone conversations with former Director Yoo.
This morning, the investigation team conducting raids on Hwacheon Daeyu’s office in Seongnam and the affiliated Cheonhwa-dongin office is also expected to conduct direct investigations on lawyer Nam. Nam reportedly left for the United States earlier this month with his wife, a former MBC reporter, and their children, following media reports on Daejang-dong. Cheonhwa-dongin No. 4, owned by Nam, invested only 87.21 million KRW in the Daejang-dong development and earned 100.7 billion KRW in profits.
Notably, Nam was previously arrested and prosecuted on charges of illegal lobbying targeting political and government circles in the Daejang-dong development project for over ten years and is currently on trial. It has been confirmed that Nam continued real estate investment activities through companies he owns and operates beyond the Daejang-dong development.
The investigation team is prioritizing whether Hwacheon Daeyu engaged in lobbying. Kim Man-bae, a media figure and the major shareholder of Hwacheon Daeyu, appointed influential legal figures as advisors and consultants to Hwacheon Daeyu. Former Supreme Court Justice Kwon Soon-il, former special prosecutor Park Young-soo, and lawyer Lee Kyung-jae, who represented Choi Seo-won (formerly Choi Soon-sil), are also likely to be investigated, as they reportedly received high advisory fees. The team is also expected to investigate the 5 billion KRW retirement payment received by the son of lawmaker Kwak Sang-do after working at Hwacheon Daeyu for six years.
The police, who conducted a preliminary investigation into Hwacheon Daeyu’s financial flows over five months before formal charges, have also transitioned to a full investigation. Yesterday, the National Police Agency’s National Investigation Headquarters assigned two cases reported by the Committee for the Protection of the Common People (Seomin Committee) on the 26th, involving Gyeonggi Province Governor Lee Jae-myung, Seongnam Urban Development Corporation, Hwacheon Daeyu officials, and independent lawmaker Kwak Sang-do’s son, on charges of bribery and embezzlement, to the Gyeonggi Southern Provincial Police Agency for investigation. To maintain continuity, the National Investigation Headquarters decided to support the Gyeonggi Southern Provincial Police Agency with seven investigators from the Yongsan Police Station’s Intelligence Team and four from the Seoul Metropolitan Police Agency’s Crime Proceeds Tracking Team.
The case involving allegations of breach of trust and embezzlement by Hwacheon Daeyu’s major shareholder and CEO was also transferred from Yongsan Police Station to the Gyeonggi Southern Provincial Police Agency. In April, Yongsan Police Station received data from the Financial Intelligence Unit (FIU) and examined financial transactions between Hwacheon Daeyu’s corporation and related parties.
Hwacheon Daeyu CEO Lee Sung-moon and major shareholder Kim Man-bae appeared once each at Yongsan Police Station as witnesses to explain the circumstances of borrowing large sums of company money. Currently, arrangements are underway to summon Lee Han-sung, CEO of Cheonhwa-dongin No. 1, who is another subject of investigation related to the FIU.
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