Gwak Sang-do, 'Son's 5 Billion Won Retirement Pay' Acquitted... 'Illegal Political Funds' Fine of 8 Million Won (Comprehensive)

[Asia Economy Reporter Kim Daehyun] Assemblyman Kwak Sang-do was sentenced to a fine in the first trial on charges of receiving illegal political funds. However, the core charge related to his son Byung-chae's 5 billion won retirement pay was judged not guilty.

Former People Power Party lawmaker Gwak Sang-do, Hwacheon Daeyu Asset Management major shareholder Kim Man-bae, and Daejang-dong private developer lawyer Nam Wook

On the afternoon of the 8th, the Seoul Central District Court Criminal Division 22 (Presiding Judge Lee Joon-cheol) sentenced former Assemblyman Kwak, who was indicted for violating the Political Funds Act, to a fine of 8 million won. A confiscation order of 50 million won was also issued. Lawyer Nam was sentenced to a fine of 4 million won.

In the first trial that day, it was ruled that "the performance bonuses received by Byung-chae cannot be evaluated as a bribe received by defendant Kwak Sang-do in return", acquitting former Assemblyman Kwak of bribery charges under the Act on the Aggravated Punishment of Specific Crimes.

◆The 5 billion won retirement pay is unusual but... cannot be deemed as a bribe

The court stated, "Even if it is considered compensation or consolation money for health conditions, the amount paid is socially unusually excessive," but added, "It is difficult to see that defendant Kwak Sang-do was informed of and involved in the Daejang-dong development project plan, and it is hard to conclude that the Hana Bank consortium was in a crisis situation at that time."

Furthermore, the court said, "It is also difficult to believe that defendant Kim Man-bae requested defendant Kwak Sang-do to maintain the consortium or that defendant Kwak actually exerted influence over Hana Bank employees," and explained, "There is suspicion that Byung-chae received money as an agent, but it is difficult to see Byung-chae as an adult supporting defendant Kwak Sang-do."

Accordingly, Kim Man-bae, the major shareholder of Hwacheon Daeyu Asset Management (Hwacheon Daeyu), who was indicted for giving bribes to former Assemblyman Kwak, was also acquitted.

The charges of violating the Political Funds Act against former Assemblyman Kwak and lawyer Nam were judged guilty. The court pointed out, "Defendant Kwak Sang-do was objectively confirmed to have a clear status as a preliminary candidate for a district member of the National Assembly," and "the amount of money paid was excessively large compared to the fees claimed by defendants Kwak Sang-do and Nam Wook as legal consultation."

The court explained the sentencing reasons, saying, "Defendant Kwak Sang-do received money in a manner not prescribed by the Political Funds Act as a preliminary candidate for election. The amount received is not small, and considering the significant damage to the legislative intent of the Political Funds Act, the nature of the crime cannot be viewed lightly," and "Although lawyer Nam cannot be lightly excused for the charge of violating the Political Funds Act, it is judged that he did not violate the Political Funds Act for personal gain."

◆First court ruling related to the '5 billion club'... Impact on future investigations and trials related to the Daejang-dong development suspicions?

After the trial, former Assemblyman Kwak told reporters, "I thought I would be acquitted," and said, "I could not understand the prosecution's indictment and sentencing request at all." He also emphasized, "I only said that the company gave performance bonuses to employees according to internal procedures, and no one said it was related to me."

When asked by reporters whether the ruling would affect other figures identified as members of the '5 billion club,' he said, "I don't know what was said between those people and Mr. Kim, so I cannot answer."

Regarding the guilty verdict on the charge of violating the Political Funds Act, he expressed his intention to appeal, saying, "Is receiving money considered a violation of the Political Funds Act because I lent money? It is money that should have been received."

This ruling is the first case where a defendant related to the Daejang-dong development suspicions, which spread in 2021, received a court judgment. It is especially the first court ruling related to the so-called '5 billion club,' which allegedly received or was promised money from Hwacheon Daeyu. On the other hand, investigations into other figures mentioned as members of the '5 billion club' remain stagnant.

At the previous closing argument hearing, the prosecutor requested the court to sentence former Assemblyman Kwak to 15 years in prison and a fine of about 5 billion won, twice the amount of the bribe received. The prosecutor also requested confiscation of about 2.5 billion won in bribes. Kim was sentenced to 5 years in prison, and lawyer Nam was sentenced to 1 year in prison.

The prosecutor argued, "According to the medical certificate for Byung-chae, he has relatively mild illnesses such as vertigo and chronic cough, and there is no reason to receive a large amount of money for health deterioration," and "A huge bonus of 5 billion won before tax cannot be paid to a low-level employee like Byung-chae." The implication was that the money was paid to former Assemblyman Kwak, not as a performance bonus to Byung-chae.

The defense for former Assemblyman Kwak has claimed innocence, stating that he did not help the Daejang-dong group and was unaware that Byung-chae received retirement pay. The lawyer argued, "Regarding the bribery charge under the Act on the Aggravated Punishment of Specific Crimes, the indictment states that around January 2015, accountant Jung Young-hak, who was instructed by Mr. Kim, reported the Daejang-dong development project twice, involving defendant Kwak in the development project," but "Jung and others came for legal consultation and advice on other criminal cases."

Regarding the charge that he received a request from Mr. Kim to allow Hana Bank to participate in the consortium, the defense said, "It is completely false," and emphasized, "The time when Hana Bank decided to participate was much earlier, according to related testimonies."

Earlier, former Assemblyman Kwak was arrested and indicted on charges of receiving 5 billion won (25 million won after tax) in late April 2021 as retirement pay and other names through his son Byung-chae, who worked at Hwacheon Daeyu, which participated in the 2015 Daejang-dong project, in return for helping Hwacheon Daeyu form a consortium with Hana Bank (bribery under the Act on the Aggravated Punishment of Specific Crimes), and for receiving illegal political funds of 50 million won from lawyer Nam. He was released on bail in August last year after 185 days in detention and has been on trial without detention since then.