Moon orders thorough probe into Seongnam land development scandal

President Moon Jae-in on Tuesday ordered a thorough probe into a snowballing corruption scandal involving a close aide to the ruling Democratic Party's presidential nominee.

Cheong Wa Dae spokeswoman Park Kyung-mee told reporters Moon instructed the prosecution and the police to "actively cooperate and do their utmost to uncover the factual truth through a swift and thorough investigation."This is the first time Moon has commented on the scandal that centers on allegations that the aide to Gyeonggi Gov. Lee Jae-myung was involved in allowing a little known asset management firm to make massive profits from a land development project in Seongnam, south of Seoul, when Lee was mayor of the city.

Prosecutor-General Kim Oh-soo said later in the day a hotline will be set up between the district offices of the prosecution and police for cooperation on the probe.

Last week, Cheong Wa Dae said it was following the revelations "sternly" but declined to elaborate.

A Cheong Wa Dae official said Moon gave the order Tuesday morning and suggested the president "decided it was time to speak."

Moon had wanted the prosecution and police to look into the scandal but refrained from voicing his position out of concern he may influence the results of the Democratic Party's primary, several presidential officials said on condition of anonymity.

Lee won the Democratic Party's nomination Sunday after securing the majority of votes needed to avoid a runoff.

He has denied any connection to the scandal.

The governor recently requested a meeting with Moon, and the two sides will discuss the request, a Cheong Wa Dae official told reporters.

Moon's call for a thorough probe by the prosecution and police sparked speculation as to whether he was ruling out a special counsel investigation into the case, a key demand of the main opposition People Power Party (PPP).

The PPP has accused Lee of masterminding the whole scheme and demanded he step down as presidential candidate.

On Tuesday, the PPP denounced Moon's directive as a declaration of rejection of a special counsel probe.

"The president's remarks today have made the launch of a special counsel all the more necessary," PPP floor leader Kim Gi-hyeon said at a media briefing.

Early this month, prosecutors arrested the aide, Yoo Dong-gyu, former acting president of Seongnam Development Corp. that was responsible for the city-run project in 2015, on charges of breach of trust and bribe-taking.

On Tuesday, prosecutors requested an arrest warrant for Kim Man-bae, the owner of the asset management firm Hwacheon Daeyu, over allegations he bribed Yoo in order to have his company chosen as a civilian partner in the project to develop Seongnam's Daejang-dong district into apartment complexes.

Hwacheon Daeyu and its affiliates are ultimately suspected of reaping 1,000 times the amount they invested in profits. Prosecutors questioned Kim on Monday.

Lee called a press conference at short notice on Tuesday, saying he would continue to serve as governor through the end of the parliamentary audit of his province on Oct. 18 and 20.

"There are going to be political attacks regarding Hwacheon Daeyu, but I believe it is actually going to be a good opportunity to explain the administrative work and achievement of the Daejang-dong development project," he said at his office in Suwon, south of Seoul. (Yonhap)