Choi questioned on snowballing ‘pi-city’ scandal

Choi See-joong

Choi See-joong, a close associate of President Lee Myung-bak, was questioned by the prosecution yesterday in a snowballing graft scandal involving a massive development project in southern Seoul.

Choi, former chairman of the Korea Communications Commission, appeared at the Supreme Public Prosecutors Office around 10:40 a.m. to face an investigation over accusations by a real estate developer that he bribed him in return for expediting construction approvals for the “pi-city” development project in Yangjae-dong, Seoul.

“I will answer the questions faithfully,” Choi told reporters upon arrival.

The central investigation unit of the Supreme Public Prosecutors Office is investigating whether Choi received a large sum of money from Lee Jung-bae, a developer formerly in charge of the pi-city project. A lobbyist, Lee Dong-yul, allegedly worked as a middleman to make the payments.

The lobbyist allegedly received 1.1 billion won ($965,000) from the developer between 2007 and 2008 and paid up to 600 million won to Choi, prosecution sources said.

Choi told the media earlier this week that he had received the money, but it was not to help the project and that he gave no favors in return. He said he used the money to finance opinion polls for Lee Myung-bak’s presidential campaign in 2007.

The prosecution said it does not have an immediate plan to look into the presidential campaign funding, and the main focus of the current probe will be whether Choi was bribed to use his influence to expedite the project.

After Choi denied that the money he received had anything to do with the pi-city project, a former executive of the pi-city development told the JoongAng Ilbo Tuesday that a key aide to Choi had tried to attract investors in the development in late 2007.

A prosecution source confirmed that account, and said the investigation would look into it.

Jeong Yong-wuk, a close aide to Choi, tried to recruit investors for the pi-city project in late 2007, around the time of the presidential election, according to the source. Pi-city’s former developer Lee Jung-bae said he paid money to Choi through the lobbyist between 2007 and 2008.

The prosecution source said the timing of the alleged bribery and Jeong’s alleged involvement to attract the investors could prove Choi’s tie to the project.

“Jeong visited one of my friends, who was a businessman, and recommended he invest a large sum in pi-city,” the source told the JoongAng Ilbo. “There were several people who were asked to make investments. At the time, I thought it was strange for Jeong to recruit investors - now that I come to think of it, he must have done so because he and Choi were involved in the project.”

Jeong, 50, is known to be close to Choi and has gotten him in trouble before. Choi stepped down from his powerful post as chairman of the Korea Communications Commission in January over allegations that Jeong had received kickbacks from a businessman in return for favors. Jeong was accused of receiving nearly 200 million won in 2009 from the chairman of a vocational school specializing in broadcasting careers and giving it to Choi.

Jeong left the country last October and has not returned.

In a related but separate investigation, the Seoul Central District Prosecutors’ Office is looking into the allegation that Lee Jung-bae raised a large slush fund to bribe top officials. The creditors of the pi-city project claimed last May that 92.9 billion won of the developer’s money was spent without expense records. Claiming the money was used for dubious purposes, the creditors demanded 129.1 billion won in compensation from Lee and other executives of the developer.

Prosecutors are looking further into the flow of the alleged slush funds to see if other top officials were involved in the network of bribery.

The prosecution also raided yesterday the home and offices of Park Young-joon, another close associate of President Lee, to find evidence to back suspicions that he also allegedly received large bribes from the pi-city developer.

The prosecution sent investigators to Park’s residence in Yongsan and another residence and office in Daegu in search for evidence to back Lee Jung-bae’s claims.

Lee recently claimed that the former vice minister of knowledge economy was also bribed through a lobbyist to expedite construction approvals for the 2.4 trillion won ($2.1 billion) pi-city development plan. He also claimed that “big shots” in the Lee Myung-bak government used their influence to rob him of his stake in the project and give it to Posco Engineering & Construction.

Park was accused of receiving about 1 billion won from Lee.

Park, 51, is known as “the king’s man” because of his influence over the president. He was an aide to the president’s elder brother, and later served as political advisor to Lee when he was Seoul mayor.

By Ser Myo-ja, Jo Kang-su [myoja@joongang.co.kr]