'Son's 5 Billion Won Retirement Pay' Gwak Sang-do's Warrant Dismissed... Lobby Investigation Faces 'Red Light'
Former Seongnam Urban Development Corporation Planning Director Yoo Dong-gyu, Hwacheon Daeyu major shareholder Kim Man-bae, and Nam Wook, lawyer and owner of Cheonhwa Dongin No. 4, a subsidiary of Hwacheon Daeyu (from left). [Image source=Yonhap News]
[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] The trial of the so-called 'Daejang-dong Four'?former Seongnam Urban Development Corporation Planning Director Yoo Dong-gyu, Hwacheon Daeyu major shareholder Kim Man-bae, Hwacheon Daeyu subsidiary Cheonhwa-dongin No. 4 owner lawyer Nam Wook, and Cheonhwa-dongin No. 5 owner accountant Jeong Young-hak?who were consecutively indicted over allegations of lobbying and preferential treatment in the Daejang-dong development project, will officially begin this week.
According to the court on the 5th, the Seoul Central District Court Criminal Division 22 (Presiding Judge Yang Cheol-han), which consolidated the trials of these four defendants, will hold the first pretrial conference at 3 p.m. on the 6th.
Former Director Yoo was indicted on charges including causing damage to the corporation by conspiring with Kim and others to divert at least 65.1 billion KRW in land development dividend profits and at least 117.6 billion KRW in project profits to Hwacheon Daeyu, as well as receiving bribes of about 300 million KRW and promising bribes of 70 billion KRW from Kim and others.
On October 21, the Seoul Central District Prosecutors’ Office special investigation team (led by Deputy Chief Prosecutor Kim Tae-hoon) arrested and indicted former Director Yoo on charges of bribery and promise of bribery under the Act on the Aggravated Punishment of Specific Crimes. On November 1, when arrest warrants were requested for Kim and lawyer Nam, former Director Yoo was additionally indicted on charges of breach of trust and bribery under the Act on the Aggravated Punishment of Specific Economic Crimes.
At that time, the prosecution judged that during the 2015 public-private joint Daejang-dong development project, former Director Yoo conspired with Kim, lawyer Nam, and accountant Jeong to draft collusive guidelines favoring Hwacheon Daeyu, adjusted scoring so that the Seongnam Neutteul consortium, which included Hwacheon Daeyu, would be selected as the preferred negotiator, and during the negotiation of the profit distribution structure, ensured that the corporation only received fixed returns. They also reduced the estimated land development profits subject to distribution (from over 15 million KRW per pyeong to 14 million KRW) and granted preferential treatment excluding the corporation’s profit recovery from apartment and townhouse construction and sales profits on five blocks directly managed by Hwacheon Daeyu. Based on this, breach of trust charges under the Act on the Aggravated Punishment of Specific Economic Crimes were applied.
Additionally, the prosecution determined that around January 31 of this year, former Director Yoo received a bribe of 50 million KRW (40 checks of 10 million KRW each and 10 million KRW in cash) from Kim as compensation for the preferential treatment in the Daejang-dong development project, applying charges of bribery after breach of trust.
Former Director Yoo’s trial was initially scheduled to start on October 10, but the prosecution requested a postponement to prepare for the additional breach of trust indictment, and the court postponed the first trial date to November 24. Before the first trial, a COVID-19 case was confirmed at Seoul Detention Center where Yoo is held, restricting his transfer for a full investigation, causing another delay.
On November 22, the court decided to consolidate the cases of Kim and others, which were indicted and assigned to Criminal Division 22, with former Director Yoo’s case for joint trial.
Kim and lawyer Nam face charges including breach of trust, bribery offering, and embezzlement under the Act on the Aggravated Punishment of Specific Economic Crimes. Although accountant Jeong was indicted as an accomplice to the two, he was prosecuted without detention considering his voluntary cooperation with the prosecution, including providing recorded statements.
At the pretrial conference, which confirms the defendants’ positions on the charges and plans evidence examination, defendants are not required to attend, unlike formal trial dates. Therefore, on the 6th, the defendants’ lawyers are expected to attend, present their positions on the prosecution’s charges and submitted evidence, and the court will decide the schedule for evidence examination.
In the upcoming trial, the focus is expected to be on verifying the conflicting testimonies between the three defendants who have consistently denied collusion since the investigation stage and accountant Jeong, who cooperated with the prosecution, through examination of submitted recorded evidence.
After indicting Kim and others, the prosecution has been summoning and investigating so-called 'Daejang-dong 5 Billion Club' members, including former National Assemblyman Kwak Sang-do, former special prosecutor Park Young-soo, and former Supreme Court Justice Kwon Soon-il, regarding lobbying allegations involving Kim and others.
However, on the 1st, the court dismissed the prosecution’s arrest warrant request for former Assemblyman Kwak, who was accused of receiving a 5 billion KRW retirement payment for his son through mediation, causing setbacks in the prosecution’s lobbying investigation from the outset.
In particular, in former Assemblyman Kwak’s case, despite clear evidence of money transactions and the prosecution applying the relatively easier-to-prove charge of mediation bribery instead of bribery requiring proof of quid pro quo to avoid difficulties in evidence, the court dismissed the warrant citing "there is room for dispute over the establishment of the crime" and "lack of sufficient grounds for detention, necessity, and appropriateness," leading to a generally skeptical outlook on the prosecution’s remaining lobbying investigations.
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