Hwacheon Daeyu owner denies claims, points finger

Kim Man-bae leaves the Seoul Central District Court in Seocho District, southern Seoul, following the conclusion of his arrest warrant review on Wednesday afternoon. [YONHAP]

The owner of a small company at the center of the Daejang-dong corruption scandal on Wednesday denied committing wrongdoing regarding the profits it reaped from the development project in Seongnam, Gyeonggi, saying that he and his company were just obeying the rules.

Speaking to reporters as he arrived at the Seoul Central District Court for his arrest warrant review, Kim Man-bae, owner of small asset management company Hwacheon Daeyu, said his company "merely followed Seongnam Mayor Lee Jae-myung's business policy at the time."

Kim faces charges of breach of trust and bribery in connection with the development to build apartment complexes in the Daejang-dong area. His company is suspected of receiving political favors in the development's profit distribution scheme.

The appearance of the Hwacheon Daeyu owner at the court marked the second time a warrant has been sought for his arrest. Prosecutors' first request for an arrest warrant was rejected by the court due to insufficient grounds.

The court is expected to decide whether to issue warrants for Kim and two other suspects in the scandal — lawyer Nam Wook and former Seongnam Development Corporation investment division chief Chung Min-yong — as early as Wednesday night.

Kim added that development policies under Lee "were for the best" and that the company entered public bidding for investors "according to the administrative guidelines and policies outlined by the city."

Prosecutors are engaged in an intensive probe of Hwacheon Daeyu, which since 2019 raked in a profit of 57.7 billion won ($48.3 million) on an investment of 49.95 million won, which was a 1 percent stake in the mixed public-private development consortium.

The company also made 300 billion won in sales of apartments in the development, while its Cheonhwa Dongin affiliates reaped in an additional 400 billion won in profits.

Comments by Kim's lawyer also highlighted prosecutors' heavy-handed treatment of him and his associates compared to that of Lee, now the Democratic Party's presidential candidate, who has thus far not faced any charges in relation to the scandal.

While Korean media earlier in the day widely reported on comments by Kim's lawyer, quoting, "If prosecutors find it hard to charge Lee with breach of trust, Kim should not face the charge either," Kim said that the media reports of his lawyer's remarks had been taken out of context.

"My lawyer was explaining that I only followed the city's administrative procedures and guidelines, but the media seems to have distorted it a little," Kim explained.

The comments by Kim's lawyer comparing his client's legal troubles to that of Lee, who has not been charged with any offenses in relation to the Daejang-dong project, have highlighted what critics have characterized as the prosecution's reluctance to probe the ruling party's presidential candidate.

While suspicions surrounding the outsized profits reaped by Hwacheon Daeyu and its Cheonhwa Dongin affiliates were sparked by Kim's relationship with Lee, the snowballing scandal has now engulfed Lee's acquaintances.

In addition to Kim, a former journalist who interviewed Lee in 2014 when he was Seongnam's mayor, the scandal also led to the arrest of Yoo Dong-gyu, a former acting president of the Seongnam Development Corporation who served on both of Lee's successful Seongnam mayoral and Gyeonggi gubernatorial campaigns.

While Lee has apologized for "appointing the wrong people" to oversee the project, he rejected all allegations raised against him, saying he designed the project to prevent private companies from making massive profits.

BY MICHAEL LEE [lee.junhyuk@joongang.co.kr]