Kim Man-bae's Detention at a Crossroads: "I Will Fight the Prosecution with My Truth"

Appearance at court for detention hearing
"Denying all charges"
Decision on issuance expected late at night at the earliest

Kim Man-bae, a key figure in the preferential treatment allegations related to the Daejang-dong development project in Seongnam, Gyeonggi Province, and the major shareholder of Hwacheon Daeyu, is appearing at the Seoul Central District Court in Seocho-gu, Seoul on the 14th to undergo a pre-arrest detention hearing. Photo by Moon Ho-nam munonam@

[Asia Economy reporters Seongpil Cho and Daehyun Kim] Kim Man-bae, the major shareholder of Hwacheon Daeyu Asset Management (Hwacheon Daeyu), appeared before the detention hearing on the 14th. Kim, a key figure in the Daejang-dong development lobbying and preferential treatment allegations, came to the court in the morning for the pre-arrest suspect interrogation (warrant substantive examination). He said, "I deny all charges" and "I will fight the prosecution with my truth."

The warrant substantive examination for Kim began around 10:30 a.m. under the presiding judge Moon Seong-gwan, who is in charge of warrants at the Seoul Central District Court. Kim appeared in the courtroom with eight lawyers. On the opposing side, five members of the investigation team, including prosecutor Lee Jeong-hyun, were present. After hearing the opinions of both the prosecution and Kim’s side and reviewing the records, Judge Moon is expected to decide on the detention as early as late that night. Once the warrant hearing concludes, Kim will be transferred to the Seoul Detention Center to await the decision on the issuance of the warrant.

The Seoul Central District Prosecutors’ Office’s dedicated investigation team (led by Deputy Chief Prosecutor Kim Tae-hoon) filed the arrest warrant on the 12th. The charges listed in the warrant include bribery, breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes, and embezzlement. Kim is suspected of promising to give 25% (about 70 billion KRW) of the profits from the 2015 Daejang-dong development to Yoo Dong-gyu, former head of planning at Seongnam Urban Development Corporation (currently incarcerated), and receiving preferential treatment during the project operator selection process. He is also accused of paying 5 billion KRW as retirement money to Byung-chae, son of lawmaker Kwak Sang-do, who was a former senior presidential secretary for civil affairs. The warrant also includes allegations that Kim colluded with former head Yoo to structure shareholder agreements so that excess profits from the Daejang-dong development would go to Hwacheon Daeyu, causing Seongnam Urban Development Corporation losses amounting to about 110 billion KRW. The investigation team applied embezzlement charges for 5.5 billion KRW out of 47.3 billion KRW borrowed from Hwacheon Daeyu whose use has not been verified.

The warrant request was made abruptly just one day after Kim was summoned for questioning. The investigation team judged that there was a high possibility of evidence destruction as Kim completely denied the allegations and showed suspicious explanations during the investigation. In fact, during the investigation, Kim claimed that the recordings submitted by accountant Jung Young-hak, owner of Cheonhwa Dongin No. 5, were false or fabricated, offering unconvincing explanations and even reversing his statements regarding suspicions about the real owner of Cheonhwa Dongin No. 1, raising further doubts. Notably, regarding his statement in the recordings that "half of the dividends of Cheonhwa Dongin No. 1 belong to 'that person,'" on the 12th, he reversed his position, saying it was "to prevent further conflicts among business operators" and that it was "false information." However, Kim’s lawyer later changed the statement again, saying it was a "mistake." When Kim appeared at the court that day, he emphasized, "There is no such person at all," and "I am the owner of Cheonhwa Dongin No. 1."

Earlier, Kim’s side expressed strong regret, saying that the arrest warrant was requested solely based on the recordings, without playing the audio, and under ambiguous standards for calculating the breach of trust amount. They argued that the suspect’s right to defense was not properly guaranteed. Regarding each charge, they claimed that former head Yoo was not involved in removing the excess profit recovery clause and thus cannot be an accomplice to breach of trust. They also argued that the bribery charge does not hold as there was no promise to give Yoo 70 billion KRW. They stated that the retirement money paid to lawmaker Kwak’s son followed internal company procedures.

The prosecution is reportedly planning to argue during the warrant hearing that since former head Yoo has already been detained on charges of breach of trust and receiving 500 million KRW in bribes from Kim, the charges against Kim are sufficiently substantiated. They may emphasize the necessity of detention by pointing out that despite sufficient evidence and witness testimonies, Kim denies the charges. Legal circles expect a prolonged courtroom battle between the prosecution and Kim’s defense team, as Kim denies all allegations.

If the court accepts the prosecution’s argument and issues the warrant for Kim, the link with former head Yoo, who is identified as an accomplice in breach of trust, will become clear, likely accelerating the investigation into the 'upper echelons.' Conversely, if the warrant is dismissed, the investigation team’s original plan to secure Kim’s custody for further investigation will be hindered, causing inevitable setbacks in the investigation. In that case, the investigation team is expected to either reapply for the warrant after supplementary investigation or proceed with non-custodial indictment and attempt to prove the charges during the trial process.