Prosecutors' Perspectives on Lee Jae-myung Investigation... "Embezzlement Charges as a Safeguard"

Clear Evidence of Embezzlement Such as Approval Documents is a 'Safety Net'
Indirect Facts Can Prove Election Fund Charges Even Without Direct Evidence
Opinions Differ on Timing of Summons and Prosecution

From the left, Lee Jae-myung, leader of the Democratic Party of Korea, Jeong Jin-sang, director of the Political Coordination Office in the party leader's office, and Kim Yong, deputy director of the Democratic Research Institute.
[Image source=Yonhap News]

[Asia Economy Reporter Choi Seok-jin, legal affairs specialist] As additional revelations from those involved in the Daejang-dong case concerning Lee Jae-myung, leader of the Democratic Party of Korea, continue to emerge, some in the legal community predict that the prosecution will have no difficulty indicting Lee on charges of breach of trust and election fund-related offenses.

On the 22nd, former prosecutors and legal experts said, "From the prosecution's standpoint, the breach of trust charge can be seen as a kind of 'safety net' in this investigation," adding, "Even if there is no direct evidence against Lee regarding election funds, it can be proven through various indirect facts."

A former chief prosecutor with extensive experience in election fund investigations, Mr. A, said, "The prosecution likely did not conduct the investigation expecting testimonies from Jeong Jin-sang or Kim Yong related to Lee," and predicted, "Sufficient investigation has probably already been conducted to the extent that both Jeong Jin-sang and Lee can be indicted."

Mr. A stated, "What the prosecution writes in the indictment is a declaration that they will investigate unconditionally. That is the minimum, and additional investigations will be conducted on top of that," adding, "However, in a situation where the two remain silent, the prosecution will absolutely not disclose evidence. They probably will not even ask about it."

Mr. A further explained, "In the Daejang-dong case, there are documents directly approved and signed by Lee during the project's progress, so even if they cannot prove that Lee received money, the investigation team likely believes that breach of trust is certain," noting, "It can be sufficiently understood that if the city does not recover all development profits and allows private businesses to share them, the city suffers a loss. Because they have this safety net, even without direct testimony or evidence, indictment on breach of trust charges is possible."

In fact, the prosecution has been investigating whether Lee's actions?such as instructing in March 2014, when he was mayor of Seongnam, to allow private businesses to participate in the Daejang-dong project, which was originally only to be carried out by Seongnam Urban Development Corporation; approving or tacitly permitting the deletion of the excess profit recovery clause in the 2015 public offering guidelines and business agreement; and changing the development plan in 2016 to separate Daejang-dong and the First Industrial Complex?constitute breach of trust.

Regarding the illegal presidential primary election fund receipt charges listed in the indictment against Kim Yong, deputy director of the Democratic Research Institute, former prosecutors also foresee that Lee could be held jointly responsible.

Mr. A said, "It may be difficult to prove through testimony, but if the flow of funds is confirmed and it is proven that the money was used during the primary, the charge can be proven through various indirect evidences supporting the point that 'Lee could not have been unaware,'" adding, "This is a method frequently used in actual election investigations."

Another former chief prosecutor, Mr. B, said, "We need to look at the internal processes at the time, such as whether the figures Kim met while organizing the election, the expenditure details, and whether these were reported to Lee, or if Lee provided election funds. But honestly, it is unconvincing that a candidate would be unaware of hundreds of millions of won in election funds."

He continued, "If Deputy Director Kim or Chief Secretary Jeong deny all their charges and refuse to testify, but for example, if it is proven that they received money from the Daejang-dong group and testified that the money was used elsewhere, not for the election, yet the ledgers or actual bank statements show the money was not used that way, the credibility of their testimony collapses, indirectly aiding the prosecution's proof."

Former prosecutor Mr. C, with extensive special investigation experience, said, "It is hard to believe that a public office election candidate does not clearly verify election funds, so if the accounting officer is punished for election crimes, the election is invalidated," adding, "In other words, to exclude money politics in elections, public office candidates must directly manage the accounting."

Mr. C also said, "The U.S. Sarbanes-Oxley Act holds CEOs accountable so they cannot claim ignorance of accounting financial statements," and added, "Similarly, in Korea, reports on election expenses must be submitted to the election commission under the candidate's name. But whether one can claim ignorance of the source of election funds should be judged by common sense."

Even after the prosecution secured the custody of Jeong Jin-sang, known as Lee's 'right-hand man,' Lee and the Democratic Party continue to claim 'opposition suppression' and 'fabricated investigation,' but the legal and political circles view Lee's indictment as an inevitable step.

Democratic Party lawmaker Baek Hye-ryun also appeared on a current affairs program on the 15th, when Chief Secretary Jeong was summoned and investigated by the prosecution, stating, "It seems certain that Lee will be indicted."

However, opinions differ regarding the timing of Lee's summons or judicial processing.

Mr. A said, "Calling Lee would be meaningless since he won't testify anyway, so they will write everything down, coordinate everything, and summon him last," but also predicted, "Rumors say the case will be handled within the year, but it might not be finished at once; they may call him gradually and ask him to come again."

Lee is currently under investigation by the Seoul Central District Prosecutors' Office for corruption allegations related to the Daejang-dong and Wirye New Town development projects, as well as for the 'Seongnam FC sponsorship fund' allegations (Suwon District Prosecutors' Office Seongnam Branch) and the suspicion of double payment of lawyer fees for Ssangbangwool (Suwon District Prosecutors' Office).

The prosecution may complete basic investigations on these multiple cases, considering Lee's position as leader of the main opposition party, transfer the cases to the Seoul Central District Prosecutors' Office, and conduct investigations simultaneously. However, if there is a lot to investigate, they may summon him multiple times or separate the cases before deciding on indictment.

Meanwhile, Nam Wook, a private businessperson in the Daejang-dong project who was released early morning the previous day after his detention period expired, appeared as a witness in the Daejang-dong trial and reversed his previous testimony, revealing that he knew from early 2015 that 'Cheonhwa-dongin No. 1,' which received the largest allocation, belonged to Lee Jae-myung's side, and that he delivered more than 40 million won during Lee's re-election as mayor of Seongnam.

Following the indictment of Lee's close aide Kim Yong and the arrest of Chief Secretary Jeong on charges of receiving money from the Daejang-dong group, and with additional revelations related to Lee continuing, voices of concern about Lee's 'judicial risk' are emerging within the Democratic Party, especially among the pro-Moon and pro-Lee Nak-yeon factions.

On the other hand, some within the People Power Party predict that ahead of the 2024 general election, it would be advantageous for the ruling party if Lee, who carries 'judicial risks,' continues to serve as opposition leader, and thus his judicial processing is delayed as much as possible.