[Newsmaker] Prosecutors detain key figure in land development scandal, raid Seongnam City Hall

A key figure in a high-profile land development corruption scandal was detained upon his arrival from the US on Monday morning for questioning on bribery and misconduct allegations.

Attorney Nam Wook was taken into custody by the prosecution on suspicion of promising to pay a bribe and breach of trust, and transported to the Seoul Central District Prosecutors’ Office immediately after he arrived at Incheon International Airport from Los Angeles.

Nam has been accused of playing a key role in the land development project in Seongnam, Gyeonggi Province, as the owner of Cheonhwa Dongin No. 4, which is one of the seven affiliates of Hwacheon Daeyu.

The attorney has reportedly earned around 100.7 billion won ($84.5 million) through the company, making more than 1,150 times his investment of 87.21 million won.

Hwacheon Daeyu Asset Management participated as a private partner in the project to construct high-rise apartments in Daejang-dong, a district of Seongnam.

Hwacheon Daeyu reportedly reaped more than 1,000 times its initial investment in the project in 2015.

Prosecutors suspect Nam was intimately involved in designing the profit-sharing structure, as approximately 25 percent of Hwacheon Daeyu's profits were funneled into Nam's company. Nam reaped the second-largest profits from the project, following Kim Man-bae, the owner of Hwacheon Daeyu.

Nam is one of four key figures in the land development project. Another is Kim Man-bae, who is believed to be the founder and major stakeholder of Hwacheon Daeyu.

Yoo Dong-gyu, who served as acting president of the Seongnam Development Corporation in charge of the land development project, and accountant Chung Young-hak, who is the real owner of Cheonhwa Dongin No. 5, have been put forward as the main culprits.

Nam is accused of paying a huge bribe to Yoo, disguising it as an investment, as a part of the deal promised by Kim to pay Yoon a total of 70 billion won.

Nam fled to the US in mid-September before the prosecution launched its full-fledged investigation into the scandal, but he broke his silence by appearing for an interview with local cable TV network JTBC last week.

Despite tremendous profits from his initial investment, Nam publicly denied his wrongdoings and pointed the finger at other suspects including Yoo and Kim.

During the interview, Nam claimed that he had been entirely sidelined from the land development project since 2015, underscoring that his role had been limited to expropriating privately owned land. In that year, Nam was acquitted of charges of taking bribes from real estate developers who asked to turn the development into a private sector-led project.

The questioning of Nam comes at a critical juncture, as prosecutors have scrambled to secure decisive evidence after the court rejected the prosecution’s request for an arrest warrant for key suspect Kim Man-bae, citing insufficient justification, last week.

Prosecutors also need to have additional evidence to charge Yoo Dong-gyu within his detention period, which ends on Wednesday. 

Yoo has been arrested on charges of bribe-taking and breach of trust since Oct. 3. But Yoo's counsel on Monday filed a request for the Seoul Central District Court to review the legality of his arrest.

Prosecutors have been seen to increase their efforts in the investigation, especially since President Moon Jae-in last week ordered a “swift and thorough” probe into the scandal.

On Monday, prosecutors raided Seongnam City Hall in connection with the scandal for the second time in three days, with an eye to seize additional email records of employees.

A team of prosecutors and investigators on Friday seized documents and other materials while searching the offices of Seongnam City which was responsible for licensing and approving urban development projects.

The city also oversaw the Seongnam Development Corporation, which spearheaded the construction of apartment complexes.

As the prosecution raided Seongnam City Hall twice in a row, all eyes fell on Gyeonggi Gov. Lee Jae-myung, who was the mayor of Seongnam between 2014 and 2018. As such, he had the authority to approve or refuse construction permits for the project.

But Lee on Monday denied corruption and bribery allegations and his responsibility for engineering the profit-sharing structure in favor of Hwacheon Daeyu, attending the National Assembly’s audit in his capacity as governor.

By Ji Da-gyum (dagyumji@heraldcorp.com)