First trial in land development scandal to kick off Wednesday

The trial of Yoo Dong-gyu in the Daejang-dong land development scandal will begin Wednesday, raising questions about whether the prosecution will widen the probe and look into senior officials close to presidential nominee Lee Jae-myung.

The Seoul Central District Court is to hold its first hearing for Yoo, who served as former acting president of Seongnam Development Corp., which was in charge of the urban development project in Daejang-dong, a district within Seongnam, Gyeonggi Province.

Yoo was indicted last month on charges of taking bribes from private investors. He allegedly received 352 million won ($297,000) in 2013 from private partners in the Daejang-dong development project on several occasions in return for providing business favors and other benefits.

Attorney Nam Wook, the second-largest stakeholder of asset management firm Hwacheon Daeyu, and other key suspects are thought to have raised the funds Yoo received.

Prosecutors also believe Yoo was promised 70 billion won in exchange for aiding Hwacheon Daeyu.

Then, early this month, prosecutors added a breach of trust charge against Yoo. Yoo was additionally charged with illegally directing around 65.1 billion won generated from the Daejang-dong project to Hwacheon Daeyu in collusion with the company’s key stakeholders. Yoo allegedly inflicted losses equivalent to the profits reaped by Hwacheon Daeyu on Seongnam Development Corp.

Wednesday’s hearing is the first related to the high-profile land development scandal that has been linked to presidential candidate Lee Jae-myung of the ruling Democratic Party of Korea.

The results of the investigation could have ramifications for the presidential election in March, as the public-private partnership project in Seongnam kicked off in 2015 while Lee was the city’s mayor.

The investigation has centered on identifying the mastermind behind the real estate development project and whether it was implemented aberrantly either under the instruction of superiors or their connivance. It also raises questions about whether prosecutors will broaden the ongoing investigation and look into a senior official tied to Lee.

Among them, Jeong Jin-sang, who is a deputy head at the election committee secretariat of the ruling Democratic Party of Korea and a close aide to Lee, has come under the spotlight. Jeong also served as head of policy in the Gyeonggi provincial government as well as Seongnam’s policy director under the stewardship of Lee.

Jeong has emerged as a key figure, particularly after publicly conceding that he had a phone conversation with Yoo just before prosecutors raided Yoo’s home in late September. On the same day, Yoo threw his mobile phone out a window in what appeared to be an attempt to get rid of evidence.

Jeong’s acknowledgment has deepened suspicions that Lee played a role in the corruption scandal.

An audio file of a conversation between key officials at Seongnam Development Corp., which was disclosed to the public, suggested that Jeong was implicated in the scandal.

According to the transcript, Jeong’s name was mentioned several times as one of the officials who instructed Seongnam Development Corp.’s then-president, Hwang Moo-seong, to resign in 2015 when Hwacheon Daeyu was established.

The prosecutors’ investigation is also at a critical juncture given that the two key suspects in the land development scandal, Kim Man-bae and Nam Wook, were arrested Nov. 4.

Kim and Nam, respectively the largest and second-largest stakeholders of Hwacheon Daeyu, are accused of unfairly and illegally making astronomical profits from the land development project.

Kim and Nam allegedly colluded with Yoo to rig the public bidding procedure in favor of Hwacheon Daeyu and others so the company would be picked as the private partner for the development project.

Prosecutors are under pressure to speed up the investigation as their detention period ends Friday and can only be extended to Nov. 22. Kim and Nam will be released if the prosecution fails to indict them before their detention period expires.

But the investigation hit another snag immediately after prosecutors broke the deadlock. The probe has been temporarily put on hold as six prosecutors and investigators on the team dedicated to the development scandal were confirmed to be infected with COVID-19 last week.

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