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[Asia Economy Reporter Heo Kyung-jun] The prosecution has requested an arrest warrant for Lee Jae-myung, leader of the Democratic Party of Korea, in connection with allegations of preferential treatment in the Daejang and Wirye development projects and suspicions regarding donations to Seongnam FC. The prosecution's judgment is to first request an arrest warrant only for the charges for which the investigation has been concluded among the various allegations surrounding Lee, and to seek the court's decision.

The Seoul Central District Prosecutors' Office Anti-Corruption Investigation Division 1 (Chief Prosecutor Eom Hee-jun) and Anti-Corruption Investigation Division 3 (Chief Prosecutor Kang Baek-shin) on the 16th requested an arrest warrant for Lee on charges including violation of the Act on the Aggravated Punishment of Specific Economic Crimes (breach of trust), the Act on the Aggravated Punishment of Specific Crimes (bribery), and the Conflict of Interest Prevention Act.

Lee Jae-myung, leader of the Democratic Party of Korea, is speaking at the 1st plenary meeting of the Basic Social Committee held at the National Assembly in Yeouido, Seoul on the 14th. Photo by Hyunmin Kim kimhyun81@

The prosecution believes that while Lee was serving as mayor of Seongnam, he provided internal information in advance to private developers of Daejang-dong and exercised undue influence so that the Seongnam E-Deul consortium, which included Hwacheon Daeyu Asset Management (Hwacheon Daeyu), could be selected as the project operator.

Earlier, in 2021, the prosecution indicted Kim Man-bae, the major shareholder of Hwacheon Daeyu, and Yoo Dong-gyu, former head of the Planning Department at Seongnam Urban Development Corporation, on breach of trust charges, specifying the amount of breach of trust as at least 182.7 billion KRW in the indictment. However, when requesting the arrest warrant for Lee, the prosecution specified the breach of trust amount as 489.5 billion KRW.

The prosecution judged that Lee obtained profits amounting to 788.6 billion KRW by January of this year by using confidential information learned during the 2014 Daejang-dong development project to have private developers selected as project operators.

Additionally, the prosecution applied charges of bribery by a third party and violation of the Act on the Regulation of Concealment of Criminal Proceeds against Lee in relation to the Seongnam FC donation suspicions. The Seongnam Branch Prosecutors' Office Criminal Division 3 (Chief Prosecutor Yoo Min-jong) judged that Lee had companies in Seongnam, such as Doosan Construction, Naver, and Cha Hospital, which had issues related to permits and approvals, pay about 13.3 billion KRW in the form of donations and then provided preferential treatment such as changes in usage. The prosecution plans to continue investigating donation suspicions involving Nonghyup and Alphadom City, which have not yet been concluded.

The prosecution viewed that Lee caused or allowed several companies to provide bribes, and although receiving bribes from Naver, he inserted a donation organization to make it appear as if donations were being made, thereby having donations paid to Seongnam FC.

Prosecutor General Lee Won-seok stated, "This is an extremely serious case of local entrenched corruption where astronomical development profits that should have originally gone to local residents and local governments were divided among real estate developers and brokers through illegal collusion between local powers and real estate developers."

The prosecution's investigation into Lee is expected to continue for some time even after this arrest warrant request. The Suwon District Prosecutors' Office is investigating allegations of payment of legal fees by Ssangbangwool Group and remittances to North Korea. Also, the Seongnam Branch Prosecutors' Office recently launched an investigation into preferential treatment suspicions related to hotel development in Jeongja-dong.

The Suwon District Prosecutors' Office investigation team is focusing on understanding the circumstances of the 8 million USD Ssangbangwool funds that went to North Korea, targeting former Ssangbangwool Group Chairman Kim Seong-tae and others. The prosecution has secured the custody of Kim's former treasurer, Kim, to verify suspicions of remittances to North Korea and payment of legal fees.

The Seongnam Branch investigation team is investigating suspicions that a tourism hotel was built on city-owned land in Jeongja-dong and received various preferential treatments such as changes in usage from Seongnam City. Initially, this case was assigned to the Seoul Central District Prosecutors' Office Anti-Corruption Investigation Division 3 and was under investigation, but considering its relevance to existing cases, it was transferred to the Seongnam Branch Prosecutors' Office. The Seongnam Branch is currently reviewing related materials.