Daejang-dong Development Team Members Urged "Excess Profits Must Be Recovered" but Were All Ignored

Development Teams 1 & 2 Submitted "Excess Profit Recovery" Opinion
Ultimately Omitted from Final Public Offering Guidelines and Business Agreement

On the afternoon of the 6th, an official is holding a stop line compliance flag at a crosswalk at an intersection in the Pangyo Daejang urban development zone in Seongnam-si, Gyeonggi-do.

It has been confirmed that when the 2015 Seongnam City Daejang-dong development project bidding guidelines were being drafted, two development teams from Seongnam Urban Development Corporation expressed opinions that the excess profits of private developers should be recovered, but these opinions were ignored.

At the Seongnam City Council Urban Construction Committee meeting held on the 6th, Lee, head of Development Team 2 at Seongnam Urban Development Corporation, stated, "Before the announcement of the bidding guidelines in February 2015, while reviewing the draft guidelines, I manually wrote and reported the opinion that 'the public sector should recover excess profits or prepare countermeasures.'"

He added, "Regarding the Daejang-dong project, since it would take at least one to two years to start compensation and complete land development, and because the economic situation after that is uncertain, I suggested that a plus alpha be considered." This meant that if the economic situation improves in the future, additional profits from the development project could arise, so countermeasures should be prepared.

Lee, head of Development Team 2, also said, "At that time, I was the team leader of Development Team 2, and Kim, head of Development Team 1, was the team leader of Development Team 1. Development Team 1 also submitted a review opinion that excess profits should be recovered, but in the end, the excess profit recovery clause was removed from the bidding guidelines."

The opinions of the two development teams were conveyed to former Development Director Yoo Hang-gi and then to former Planning Director Yoo Dong-gyu. Lee stated that he does not know whether former Director Yoo ultimately removed the clause from the final bidding guidelines.

The drafting of the bidding guidelines was led by the Strategic Business Office directly under former Director Yoo. Later, even at the stage of the business agreement, the content related to excess profit recovery was ultimately excluded.

In May of the same year, Development Project Team 1 of Seongnam Urban Development Corporation drafted an official document stating that "if the private developer's proposed sale price exceeds expectations, a separate clause should be included to distribute profits according to share ratios." However, just seven hours later, a review document excluding this content was reported to the Strategic Business Team under former Director Yoo, and the Strategic Business Team is known to have sent back the document with the excess profit recovery clause deleted to Hwacheon Daeyu.

The prosecution believes that former Director Yoo, who held actual power at Seongnam Urban Development Corporation at the time, pressured the staff to delete the excess profit recovery clause, and is summoning and investigating related persons.