A cycle of corruption
The author is an editorial writer of the JoongAng Ilbo.
Former presidential spokesman Kim Eui-kyeom will soon join the National Assembly as a lawmaker for the ruling party. Two years ago, he caused an uproar after he was found to have bought an old building for 2.57 billion won ($2.2 million) in a district in southwestern Seoul in 2018 which later was designated as a redevelopment zone. The government was embarking on a crackdown on multi-property ownership at the time. Kim raised nearly half of the sum through bank loans while using his title as a Blue House staff member. He himself moved into a government residence to save housing costs. Upon public backlash, he hurriedly sold off the building at a profit of 880 million won.
Two years later, a bolder organized deal-making has been exposed. Fourteen employees of the Korea Land and Housing Corp. (LH) bought over 10 billion won of land in Gwangmyeong-Siheung, Gyeonggi, which later was named as the site to host massive apartments for the third New Town project. Like the ex-presidential spokesman, they moved on their instincts. Government employees like them and Kim should not have exploited their information access to make money out real estate when the government has been battling with real estate speculation.
The presidential spokesman too should have followed the Blue House’s order to other presidential staff to dispose all of other properties except for one apartment they live in. LH staff are the administrators of the policy reining in gains from real estate beyond single home ownership. They should have strived to increase housing supply for the people, not looking out to reap profits out of land sites for housing supply.
But they went on doing what their greed has guided. They used the extreme borrowing means they criticized to buy the properties. They did so because they too doubted that the government’s excessive real estate regulations would work on the market. That is the essence of their scandals.
The popular three Gangnam districts have only 300,000 apartments. Home ownership still hovers below 60 percent, owing to never-ceasing housing demand in certain areas. Gangnam has no more space to host new apartments. The remaining option is to rebuild aged apartment complexes. Another plausible option is to create replacements for Gangnam in other areas. The third New Town project in Gwangmyeong-Siheung was to address some of the needs.
Former presidential spokesperson Kim and LH employees could be unsettled in the hot seat. They have been exposed to have done the exactly opposite of what they had been preaching or ordered to administer. LH staffers have deceived the people with their access to policy information. They could grumble that they were not the only ones. Cho Hyun-ok, former presidential secretary for personnel affairs, bought two studios under the name of her husband before she left for Germany as the new ambassador. Kim Jo-won, former secretary on civil affairs, voluntarily stepped down to retain two apartments in Gangnam.
The anti-market and contradictory real estate policy has exposed all sorts of side and ill effects. Unless the anti-market policies are not withdrawn, follies and irregularities as well as public agony will not end. The government is still going after speculation in Gangnam. How much more do the people have to suffer?