Incheon Michuhol-gu Files 3 Billion Won Damage Suit Against Former District Heads... "Financial Loss Due to Favoritism Toward Private Business Operators"

Incheon Michuhol-gu has taken legal action against the former district mayor and responsible officials in connection with the Board of Audit and Inspection's last year's allegation that preferential treatment was given to the developer of the Juan 2·4-dong urban development project.

Michuhol-gu announced on the 5th that it has filed a 3 billion won lawsuit for damages against four former and current officials, including former district mayor Park Wooseop, who was in office when the project agreement was promoted. The district claimed part of the loss amount based on the fact that they unjustly exempted the developer from the obligation to pay the agreement performance deposit and excess project costs.

Earlier, on the 28th of last month, Lee Young-hoon, mayor of Michuhol-gu, held a press conference stating, "We will do our best to prepare methods to compensate for losses caused by the wrongful administrative actions of officials through consultations with the district's legal advisors," and added, "Since there is no legal basis to recover from the project developer, we plan to take recovery measures against the officials responsible at the time."

Incheon Michuhol-gu Office [Image source=Yonhap News]

This project was promoted in February 2012 when Michuhol-gu selected SMC Development as the preferred negotiator for the Juan 2·4-dong Urban Development Zone 1 and signed an agreement. The structure was such that the district would relocate Juan Elementary School using the land sale proceeds received in advance and create commercial and business land (19,431㎡), and the developer would build a medical complex and commercial/business facilities on this land to gain sales revenue.

During this process, the district exempted 4.5 billion won of the 5 billion won agreement performance deposit. This decision was made because the agreement performance deposit was not considered a critical issue for project promotion, and the relocation of Juan Elementary School in Urban Development Zone 1 was delayed. However, the Board of Audit and Inspection pointed out that it was wrong for the district not to consider terminating the agreement after receiving only 500 million won of the 5 billion won deposit and for exempting the remaining deposit payment obligation.

Additionally, the district was notified to prepare compensation measures, citing losses of 37.5 billion won due to changing the agreement to state that "the district bears the land development cost (148.2 billion won) exceeding the land sale price (110.7 billion won)." At the time, the district arbitrarily judged that no excess project costs would occur and released SMC Development from the obligation to bear excess project costs without obtaining the city council's consent.

Regarding this, the district has already lost in the first and second trials of the lawsuit filed by SMC Development in July 2020, claiming project settlement funds, and paid 37.5 billion won. SMC Development filed a settlement claim lawsuit against Michuhol-gu, alleging that the district advanced the land development costs and promised to settle later but did not return the money.

Michuhol-gu plans to consider increasing the amount of damages claimed against former mayor Park and others once the final judgment on the settlement claim lawsuit filed by the developer against the district is confirmed.