Simmering close to a boilNothing makes sense in the scandal over the development of 239 acres in Daejang-dong in Seongnam city, Gyeonggi. Gyeonggi Gov. Lee Jae-myung who licensed the multibillion-dollar pork-barrel project as the mayor of Seongnam claimed it had been highly risky business. But it turned out to be a sure jackpot. Risks in an urban development lie in land purchase, licensing and sale of apartments. Hwacheon Daeyu that won the license to spearhead the development project had no business experience. A license for a massive land development that usually takes more than 10 years for final approval also landed at Hwacheon Daeyu shortly after it was founded.
Business was plain sailing from then on. From a mere 100 million won ($82,246) capital injection, the business generated dividends of 404 billion won. The company earned another 450 billion won from selling apartments built on the site.
State-run Korea Housing Finance Corp. backed a guarantee for Hwacheon Daeyu on its judgement that the project had little risk of failing and could sell the apartments entirely within three months of offering, according to its review documents in 2018. It deemed profit could be made even if 20 percent of the apartments were undersubscribed.
The easily earned money was spent extravagantly. The son of former People Power Party lawmaker Kwak Sang-do was rewarded with 5 billion won in severance pay after working at the company for several years. The daughter of Park Young-su — the special prosecutor who had investigated the power abuse of former president Park Geun-hye and worked for the company — won the subscription for an apartment in Daejang-dong whose value went up 800 million won. The two cases have outraged young people who cannot even dream of buying a home in the capital region.
When he was summoned for police questioning, Kim Man-bae, the largest shareholder of Hwacheon Daeyu, said he was sorry that “the brothers he liked” had become embroiled in the scandal. The so-called brothers are nearly 30 former judges and senior prosecutors he became acquainted with while covering judiciary affairs as a journalist and recruited as advisors and consultants to the company. Rep. Kwak also received 350 billion won in donations from Hwacheon Daeyu. Kim, the largest shareholder, borrowed 47.3 billion won from the company. An individual can rarely borrow that much corporate money for any purpose.
Nothing makes sense. Yet nobody claims to have done any wrong. Law enforcement authorities must not waste time to find the truth about the evolving scandal. Public rage is simmering to a boiling point.