Yoo Donggyu, Nam Wook, and Other Private Operators Acquitted in First Trial Over Wirye Development Corruption

Accused of Using Insider Information
to Select Private Operators and Obtain Dividend Profits
Court: "Difficult to Recognize Acquisition of Dividend Profits"... All Acquitted

Yoo Donggyu, former head of planning at Seongnam Urban Development Corporation, along with attorney Nam Wook, accountant Jung Younghak, and other private sector associates involved in the Daejang-dong case, who were additionally indicted on suspicions of preferential treatment in the Wirye New Town development, were acquitted in the first trial.

Yoo Donggyu, former head of Seongnam Urban Development Corporation, is making a statement after being acquitted in the first trial of the case involving violations of the Political Funds Act and bribery under the Act on the Aggravated Punishment of Specific Crimes at the Seoul Central District Court in Seocho-gu, Seoul on the 30th. Photo by Kang Jinhyung aymsdream@

On January 28, the Seoul Central District Court Criminal Division 1 (Presiding Judge Lee Chungeun) acquitted Yoo, Nam, and Jung, who had been charged with violating the Anti-Corruption and Civil Rights Commission Act. Jung Jaechang, a major shareholder of Wirye Asset Management who participated in the project, and Joo Jihyung, CEO of the special purpose company Blue Wirye Project, were also found not guilty.

The court acknowledged that the information passed to private sector operators constituted a "secret" under the Anti-Corruption Act, but explained that in this case, the indictment did not specify the acquisition of business operator status as a property benefit, and therefore the court would not make a separate judgment on this matter. The court stated, "It is difficult to conclude, as per the indictment, that the defendants acquired specific 'dividend profits' as property benefits by using secrets defined by the Anti-Corruption Act during the development project."

They were accused of using internal secrets of Seongnam City and Seongnam Urban Development Corporation-such as the project schedule, feasibility evaluation report, and public offering guidelines for the A2-8 block of Wirye New Town in July 2013, which were obtained by Yoo-to ensure that the consortium Wirye Asset Management, formed by Nam and Jung, was selected as the private developer, and that Hoban Construction was selected as the contractor.

According to the prosecution, after the development project was carried out from August 2014 to March 2017, generating a total project profit of approximately 41.8 billion won, the private developers received dividend profits of about 4.23 billion won and Hoban Construction received about 16.9 billion won, each according to the dividend ratios stipulated in the shareholder agreement. The total unjust gains acquired by the private sector operators were estimated at 21.13 billion won.

At the final hearing in November last year, the prosecution argued, "The defendants formed long-term collusive relationships through monetary transactions, leading to unfair business operator selection and other irregularities," and sought a two-year prison sentence each for Yoo, Nam, and Jung. Nam and Jung were also each requested to pay a forfeiture of 1,410,620,000 won. For Jung, the prosecution sought two years and six months in prison and the same amount in forfeiture, and for Joo, a one-year prison sentence was requested.

Yoo, Nam, and Jung were also indicted for corruption related to the Daejang-dong project and were sentenced to prison terms ranging from four to eight years in the first trial on October 31 last year.