MB’s ‘big shots’ robbed my project, says developer Lee

Choi See-joong and Park Young-joon

A former developer of the “pi-city” project in southern Seoul has told prosecutors that “big shots” in the Lee Myung-bak administration stole his part of the project and awarded it to one of the country’s largest construction companies.

Lee Jung-bae, a real estate developer formerly in charge of the 2.4 trillion won ($2.1 billion) pi-city development plan in Yangjae-dong, southern Seoul, told the prosecutors that “big shots” in the Lee administration had used their influence to rob him of his role, according to sources from the Supreme Prosecutors’ Office, and give it to Posco Engineering & Construction in March.

Lee is the same developer who says he spent 6 billion won to lobby influential politicians to get the project going. He told the JoongAng Ilbo that he believes more than 3 billion won was paid in bribes to Choi See-joong, one of the closest associates of President Lee Myung-bak, and and Park Young-joon, former vice minister of knowledge economy.

On Monday, Choi admitted to receiving bribes from a broker, which he said he used for President Lee’s 2007 election campaign. He denied repaying the bribes with business favors.

The central investigation unit of the Supreme Prosecutors’ Office will limit its probe into Lee’s alleged lobbying activities to bribe top officials to expedite approvals for the pi-city project. But the possibility grew with his testimony that the investigation would widen.

According to the sources, Lee testified that he was investigated by the police after he stopped providing bribes for two close associates of President Lee.

Lee also claimed that his creditors, including Woori Bank, forced him to give up the project and then filed to put his company into court receivership.

“It was a project with more than 1 trillion won of development profit,” Lee was quoted as telling prosecutors. “But the administration’s bigwig took it away from me.”

He also claimed that his creditors offered to pay him 20 billion won for his stake in the project. After he rejected the offer, the creditors took his rights in the project and Park Young-joon used his influence to invite Posco to become the new lead developer.

The pi-city project was intended to build the country’s largest complex of malls, logistics centers and offices at the former site of a cargo terminal in southern Seoul. The project began in 2004 but saw little progress due to sluggish issuance of construction permits from the city government. A lurching economy, depressed real estate market and financing troubles further bedeviled the project, and the approval was only made in November of 2009.

The prosecution sources said they were expanding the investigation to look further into the developer’s testimony.

Three days before Woori Bank filed for court receivership in August 2010, Posco signed an agreement with the bank to participate in the project. In March of this year, Posco was named as the new developer.

Lee and his creditors were involved in other complications. The police investigated Lee in November 2010 on charges of breach of trust and embezzlement, while his creditors filed a civil suit against him in May 2011, demanding compensation of 129.1 billion won. That year, the court-appointed manager of the project was attacked.

In November 2011, Lee asked the prosecution to investigate Woori Bank on charges of fraud and obstruction of business.

According to the prosecution, the central investigation unit will look into Lee’s alleged bribery of top officials. Other issues involving the business rights over pi-city will be investigated by the Seoul Central District Prosecutors’ Office.

The prosecution began yesterday tracking down bank transactions of Park to see if Lee’s “lobbying funds” had reached him. The prosecutors also began looking into the possibility that other influential members of the administration are involved in the case.

Meanwhile, the Supreme Public Prosecutors’ Office said it has summoned Choi to show up for questioning at 10 a.m. today. The prosecutors plan to ask him about the allegations that he received a large sum of money from the developer and used it to finance Lee’s presidential campaign.

Choi admitted Monday that he had received the money from Lee Dong-yul, a hometown friend who acted as a lobbyist for the pi-city developer, and used it to pay for opinion polls for Lee Myung-bak’s presidential campaign in 2007. While the real estate developer claimed that he gave about 6 billion won to the broker for “lobbying activities,” Choi is suspected of receiving about 1 billion won.

Choi has been barred from leaving the country since Sunday. The prosecution also said it will seek a warrant to detain Choi.

Today’s questioning is expected to focus on whether Choi received the money in return for helping the real estate developer or not.

After Choi admitted to receiving the bribes, the mystery became why Choi, known as President Lee’s political mentor, made such a bombshell revelation.

Until he stepped down from the chairmanship of the Korea Communications Commission in January, Choi served in the powerful post for about four years. He was considered one of the most influential officials in the Lee administration because of his close ties with Lee. Choi was a Seoul National University classmate of the president’s elder brother and comes from the same hometown as the two Lees, Pohang.

By Lee Dong-hyun, Ser Myo-ja [myoja@joongang.co.kr]