The CEO of the developer who absconded with 25 billion KRW for the Gyeongnam Hapcheon Video Theme Park hotel construction project was arrested on the 7th.
According to the Gyeongnam Provincial Police Agency, at around 4 p.m. on the same day, a pre-arrest detention hearing (warrant review) for CEO A was held at the Changwon District Court Geochang Branch.
The judge in charge of warrants found concerns about flight risk and evidence destruction and issued an arrest warrant around 6 p.m.
A is suspected of improperly withdrawing 25 billion KRW from the hotel construction project budget within Hapcheon Video Theme Park in April and absconding.
The Metropolitan Investigation Unit of the Provincial Police Agency apprehended A at a motel in Daejeon around 12:30 a.m. on the 5th on charges of breach of trust and embezzlement.
The Hapcheon Video Theme Park hotel construction project involves building a 200-room hotel on a 1,607㎡ site within the Yongju-myeon Video Theme Park.
Hapcheon County and the developer signed an implementation agreement worth 59 billion KRW, under which the county provided the land free of charge, the developer would build the hotel and donate it to the county, and the developer would hold the hotel operation rights for 20 years.
The construction was carried out with the developer investing 4 billion KRW and borrowing the remaining 55 billion KRW through real estate project financing (PF).
In March this year, when the developer requested an increase of 15 billion KRW in the project budget citing a surge in material costs due to inflation, the county reviewed the validity of the increase and discovered excessive project spending.
When the county tried to confirm this by contacting CEO A, A had absconded with about 25 billion KRW of the 55 billion KRW loaned project funds and had been unreachable since April 19.
On May 31, the county filed a complaint with the police against A and five other developer associates on charges of breach of trust, embezzlement, and violations of the Electronic Financial Transactions Act, and on June 20 declared abandonment of the project.
With the project canceled, Hapcheon County has taken on the financial burden of repaying loan interest and fees for the unrecovered loan according to the implementation agreement signed in 2021.
The county has repaid 26.3 billion KRW of the 55 billion KRW loan principal and interest but is reported to have to bear about 30 billion KRW more in interest and other costs.
A police official said, “After completing additional investigations into the use of funds and any collusion, we plan to hand over A to the prosecution.”
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