Prosecutors Request Arrest Warrant for Baekhyeondong Private Contractor Over 48 Billion Won Embezzlement and Breach of Trust

The prosecution has requested an arrest warrant for a private developer in Baekhyeon-dong suspected of embezzling and breaching trust involving approximately 48 billion KRW in connection with preferential treatment allegations in the Baekhyeon-dong development project.

On the 5th, the Anti-Corruption Investigation Division 1 of the Seoul Central District Prosecutors' Office (Chief Prosecutor Eom Hee-jun) announced that it had requested an arrest warrant for Chairman Jeong (67) of the real estate development company Asia Developer on charges of embezzlement, breach of trust, and bribery under the Act on the Aggravated Punishment of Specific Economic Crimes. The prosecution explained the reason for the request, stating, "Chairman Jeong's crimes are serious, and there is a risk of evidence destruction."

Chairman Jeong is suspected of embezzling about 48 billion KRW by inflating construction costs and service fees at three companies: Seongnam R&DPFV, the Baekhyeon-dong project operator, and Asia Developer and Yeongrim General Construction, which he effectively owns, from 2013 until March of this year. Additionally, he is charged with secretly pocketing 200 million KRW from the head of a landscaping company as a kickback for issuing service orders.

Asia Developer holds a 46% stake in Seongnam R&DPFV, making it the largest shareholder. It has been investigated that Seongnam R&DPFV earned approximately 300 billion KRW in sales profits, and Asia Developer gained about 70 billion KRW in dividend profits through the Baekhyeon-dong development project. During the investigation into the funds of the Baekhyeon-dong development project, the prosecution discovered that a nonprofit organization, chaired by Chairman Jeong's wife, held cash assets worth around 4 billion KRW sourced from Seongnam R&DPFV, prompting a full-scale investigation.

The prosecution is also considering the possibility that the 7.7 billion KRW transferred to former Korea Housing Technology CEO Kim In-seop as a bribe for facilitating permits originated from company funds embezzled by Chairman Jeong. Going forward, the prosecution is expected to conduct additional investigations into Chairman Jeong's breach of trust and violations of the Mountainous Area Management Act by securing his custody.

The Baekhyeon-dong development project involved constructing and selling apartments on the former Korea Food Research Institute site in Baekhyeon-dong, Bundang-gu, Seongnam City, covering 111,265 square meters. There are suspicions that the development permit conditions were altered to favor Chairman Jeong and other private developers. The prosecution suspects that former CEO Kim played a key role in the process of changing the permit conditions favorably. The prosecution also claims that Lee Jae-myung, leader of the Democratic Party of Korea, and his close aide Jeong Jin-sang received a total of 8.2 billion KRW in money and business rights from Chairman Jeong as a bribe facilitated by Kim for permit arrangements.