Controversy over Lee’s retirement home plot persists

Opposition steps up offensive against ruling party ahead of Seoul mayoral by-election


Controversy over President Lee Myung-bak’s new retirement home plot in Seoul has deepened as opposition parties are stepping up their political offensive against the ruling party ahead of the upcoming Seoul mayoral by-election.

Cheong Wa Dae and the ruling Grand National Party have moved quickly to fend off the fallout from the allegations that center primarily on why the president purchased the 463-square-meter plot in Naegok-dong, southern Seoul, under his son’s name.

Following reports that his only son Si-hyeong, 33, bought it for 1.12 billion won ($967,435) in May, the main opposition Democratic Party and liberal media outlets launched a salvo of suspicions that the president had sought to bequeath part of his wealth to his child through “unjust, irregular” means.

Highlighting what they claim could be one of the conservative president’s major ethical lapses, the DP also suspected that the contentious purchase was made in violation of the “real-name” law for real estate transactions.

As controversy raged on, Lee decided to have the deed of the questionable plot quickly transferred to himself from his son on Tuesday, hours before he departed for the U.S. for a state visit.

Striving to help the unified liberal candidate win in the Oct. 26 vote, whose outcome is seen as a barometer of public sentiment ahead of the parliamentary and presidential polls next year, his political foes also berated Lee for reversing his 2009 remarks.

In July 2009, the president promised to donate all of his assets to help youths from low-income families, except for his residence in Nonhyeon-dong in affluent southern Seoul. He said that he would move back there after retirement in February 2013.

Cheong Wa Dae claimed that Lee decided to build a new retirement house in Naegok-dong as it would cost too much money to establish security facilities in the upscale neighborhood. It also cited nearby tall buildings overlooking Lee’s private home.

During this week’s parliamentary interpellation, DP Rep. Lew Seon-ho grilled Prime Minister Kim Hwang-sik on the string of allegations over the plot.

“Strictly speaking, it is a violation of the real-name law as the president bought a real estate property of his own under his son’s name,” Lew said.

The prime minister dismissed it, saying that the process of the purchase proceeded legitimately.

“If he had borrowed his son’s name and registered the house under it, it could have been a violation of the law. But his son actually bought it and signed the contract himself with a loan from a financial institution,” he said.

According to Cheong Wa Dae, to purchase the plot, Si-hyeong working at his uncle’s company borrowed 600 million won from a bank, using his mother’s share of the residence in Nonhyeon-dong as collateral, and 500 million won from his relatives.

His assets, which were registered with the government in 2008, amounted to only 36 million won.

Some critics said this process of purchasing the house could spark a dispute over whether Lee sought to hand over his wealth to his son without paying relevant taxes including a gift tax.

The presidential office argued that Lee and the first lady did not use their names to buy the plot due to the possibility that prices of the land in the neighborhood would rise when their names are mentioned, and security concerns.

One of the key allegations by the DP was that some taxpayers’ money was illegally used to help Lee’s son purchase the retirement plot more cheaply.

The DP argues that as the presidential office and Si-hyeong bought their plots of land for the house and security facilities altogether, Si-hyeong paid less money than he had to pay while the presidential office paid far more than it was supposed to.

The government-set price of the housing lot for taxation was some 1.29 billion won, but Si-hyeong paid only 1.12 billion won. In contrast, the government price of the plot for security facilities was 1.09 billion won, but the office paid 4.28 billion won.

Cheong Wa Dae said that as the plot for security facilities is located near a big road, the price should be much higher than the one for the retirement home.

By Song Sang-ho (sshluck@heraldcorp.com)