Lack of upright leaders
The author is a senior editorial writer of the JoongAng Ilbo.
In the spring of 1990, Chung Tae-soo, the late founder and chairman of the now-defunct Hanbo Group, visited Seoul Mayor Goh Kun. He pleaded for the city to grant a sale of land to his business group to build residential apartments in the Suseo district in southern Seoul, which was under development. After Mayor Goh said no, Chung withdrew a fat envelop from his jacket pocket. Goh immediately kicked him out. Chung’s face reddened but he left the room with a smirk. The mayor, who later served as prime minister, shared the episode in his memoir.
Hanbo Group had lobbied hard to win a special allotment in the Suseo development project from 1989. The presidential office pressured the Seoul mayor to grant the land sale to Hanbo. The prosecution arrested the director responsible for city planning at City Hall and isolated Goh. Then the mayor appointed Kim Hak-jae, a lower-level official, to the senior director-general office to fend off outside pressure. Goh fought for two years until he was sacked by President Roh Tae-woo in late 1990. The special allotment was immediately granted to the business group.
In 1991, the Hanbo lobbying scandal blew up. Chung, lawmakers from both parties and many government officials were arrested for bribery. During a slush fund investigation of retired Presidents Chun Doo Hwan and Roh Tae-woo, Roh was found to have received 15 billion won ($12.5 million) from Chung. The Hanbo case was the biggest real estate corruption scandal involving politicians, government officials and businessmen. Hanbo kept up lobbying and finally went bust by early 1997. The downfall of Hanbo helped trigger a national liquidity crisis amid the Asian financial crisis in late 1997. If Hanbo had been stopped earlier, the country could have avoided an international bailout.
As the Suseo case revealed, a scandal involving political and business connections does not stop with just a few individuals. Numerous people must collaborate and collude in any big business deal that leads to scandal. Keeping secrets can be hard as there are too many witnesses. The truth eventually surfaces. Just as Goh was in charge of granting pieces of the big development project to developers in his time, the Daejang-dong development project was approved by Lee Jae-myung, then Seongnam mayor and now Gyeonggi Governor, who is the presidential candidate of the ruling Democratic Party (DP). Several people earned extraordinary riches in his former city. Yoo Dong-gyu — former acting president of the Seongnam City Development Corp., who is deeply involved in the scandal — was one of his closest aides. Gov. Lee previously said he had designed the Daejang-dong development project. Too many coincidences point to Lee behind the hugely lucrative development project.
The governor claims he did not earn a cent from the project. “Cleanness” is his political motto. Lee should be furious with his confidante for staining his reputation. The governor is known for his hot temper and quick actions. He stormed into the headquarters of the Shincheonji religious group when it became the epicenter of the coronavirus. But he has been unusually reserved with the Daejang-dong case. Lee is very sensitive to public reactions to the extent of being called a “populist.” Public sentiment is boiling about the Daejang-dong project. It comes at a sensitive time, when people are plagued by soaring real estate prices. But atypically, Lee has been insensitive to public feelings. He claimed Seongnam city could earn 550.3 billion won in profit from the development project. Despite speculative activities, the mayor claimed the project was something he was proud of, not something to apologize for. It is unusual for Lee to go entirely out of sync with public sentiment.
The essence of the Daejang-dong scandal is not that the city earned 550.3 billion won in profit from a joint public-private development project, but that an even greater 800-billion-won profit went to a select few. The reasoning by Lee and his presidential campaign is bizarre. They argue that developers like Hwacheon Daeyu — an asset management company at the center of the scandal — were simply lucky. But luck must not come from a business with ordinary people ignorant to the profit design. They argue the massive profits earned by Hwacheon Daeyu were all paid out after Lee resigned from his mayorship. After suspicions grew bigger, Lee drew a line, saying, “You have to bargain with the devil” in a joint public-private project.
If no one could stop Hwacheon Daeyu, there certainly was a serious loophole in the system. The collective silence in the Moon Jae-in administration shows there is no honest boss like Goh or working-level official like Kim. Politicians, lawyers, government officials, journalists, and businessmen sucked out juice from the Daejang-dong windfall. They all came from the greedy mainstream in a winner-take-all society.
In his acceptance speech after winning the ruling party primary, Lee vowed a final battle with the corrupt mainstream. But he himself is the mainstream after having dominated a mayorship and governorship for 12 years.
In his inaugurating speech four years ago, President Moon promised to create a society where privileges and foul players cannot exist and everyone can gain when they play by the rules. But he kept silence. The Blue House only said it was watching the situation “gravely.” The president is the chief executive over national affairs, not a commentator.