Controversial land development project causes partisan turmoil

The fallout from a controversial land development project authorized by Gyeonggi Province Gov. Lee Jae-myung is expanding, threatening to bog down parties on both sides of the aisle.

The case came to light just weeks earlier after it was reported that Lee allegedly gave business favors to Hwacheon Daeyu Asset Management in 2015 to help the firm take part in a land development project in Seongnam’s Daejang-dong when he was mayor of the city.

Lee was accused of unlawfully aiding Hwacheon Daeyu with capital of 350 million won ($295,811) and gaining more than 400 billion won in dividends.

The region, located adjacent to a major startup cluster just south of Seoul, has been filled with high-rise apartment buildings and infrastructure during the course of the development project.

The allegation immediately prompted fierce criticism from the main opposition People Power Party, which accused Lee of abusing his power as mayor.

Lee has denied all the allegations against him, saying he has never earned any personal profit from the “fairly executed exemplary project.”

A prosecution investigation has been launched in relation to the allegations, not into Lee but into members of the People Power Party, which is accused of using false information to derail his presidential bid.

The controversy took an unexpected turn Sunday when it was reported that the 32-year-old son of Rep. Kwak Sang-do of the main opposition party received an unreasonably high sum as severance pay after working at Hwacheon Daeyu as a full-time employee for seven years.

He reportedly received 5 billion won in severance pay in March. Kwak’s son is said to have drawn monthly pay of about 3.8 million won when he left the company and would legally have been entitled to severance pay of about 26.6 million won.

The news immediately turned the tide in favor of the ruling bloc, as Kwak has been one of the most vocal critics of the Moon Jae-in administration and the ruling party. Kwak is one of the opposition bloc’s leading figures, having served as senior secretary for civil affairs under former President Park Geun-hye.

It was speculated that Kwak might have indirectly invested in Hwacheon Daeyu and received dividends as part of his son’s severance pay. Kwak and his son have denied all allegations against them flat out.

Kim Man-bae, the largest shareholder of Hwacheon Daeyu, said before appearing for police questioning Monday that the large sum paid to Kwak’s son also included compensation for an industrial accident that he experienced while working for the firm.

Kim did not go into detail, saying it was a private matter.

But Kwak nonetheless ended his People Power Party membership on concerns that the allegations could harm the party’s prospects ahead of next year’s presidential election.

People Power Party Chairman Lee Jun-seok went further Tuesday by asking Kwak to give up his National Assembly seat in face of the controversy, as his explanation for the severance pay was not enough to satisfy the public. The party leader warned of official procedures within the legislative branch to strip Kwak of his post.

Opposition figures have been saying Gov. Lee is the main figure in the scandal, calling for a special counsel investigation and a special parliamentary inquiry into his involvement. They have also argued that Kwak’s son is not the only one who has received a large amount of severance pay after working for Hwacheon Daeyu.

“The main body of the scandal is Gyeonggi Province Gov. Lee Jae-myung,” said former Prosecutor General Yoon Seok-youl, a key presidential contender within the People Power Party, in a Facebook post Monday.

“Lee himself came before TV to say he was behind the development project, and evidence is out there. There’s no way he can hide from this.”

The Gyeonggi governor’s side denounced the main opposition party over Kwak’s departure from the party, hinting that the severance pay Kwak’s son received may have reflected a bribe for Kwak’s actions during his time with the Park administration.

Gov. Lee also called for the case to be handed over to the prosecution or to the Corruption Investigation Office for High-ranking Officials. His campaign office filed a complaint with the prosecution Sunday, accusing Kwak of spreading false information.

Kwak has claimed that Gov. Lee is the de facto owner of Hwacheon Daeyu and designed the profit-sharing scheme for the 2015 development project. The lawmaker warned Monday that he would take legal action against Gov. Lee’s campaign team in response.

By Ko Jun-tae (ko.juntae@heraldcorp.com)