Two detentions in Daejang-dong corruption scandal

Politics

Published: 14 Dec. 2022, 17:31

Two detentions in Daejang-dong corruption scandal

Kim Man-bae, owner of Hwacheon Daeyu, an asset management company at the center of the Daejang-dong corruption scandal, stands outside the Seoul Central District Court in Seocho District, southern Seoul following a warrant review in November 2021. [YONHAP]

Prosecutors detained two acquaintances of a key figure in a high profile corruption scandal on charges of concealing illegal profits in the case.

The two men, Lee Han-seong and Choi Woo-hyang, are allegedly close friends of Kim Man-bae, the owner of Hwacheon Daeyu, an asset management company at the center of the scandal.

The company raked in 57.7 billion won ($48.3 million) in profit from a 1 percent stake, on an investment of 49.95 million won in a real estate project in the Daejang-dong area of Seongnam, Gyeonggi.

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

Lee’s involvement in Hwacheon Daeyu dates to 2018, when he became the company’s chief audit executive. He was listed in 2019 as an executive of Cheonhwa Dongin No. 1, a company wholly owned by Hwacheon Daeyu, and was named co-chairman of Hwacheon Daeyu in September 2021.

Prosecutors believe Lee managed Kim’s finances, and suspect him of helping Kim conceal Hwacheon Daeyu’s gains from the development.

Prosecutors thus far have frozen assets worth a total of almost 80 billion won that they believe are controlled by Kim and others who benefitted from the Daejang-dong project’s unusual profit distribution scheme.

Of the two men detained Tuesday, Choi has been acquainted with Kim Man-bae for over 20 years, according to prosecutors. He serves as an executive at Hwacheon Daeyu and served as a vice-president of the Ssangbangwool (SBW) group from 2010 to 2014.

Prosecutors suspect Kim lent Choi 2 billion won in February 2020, 3 billion won in June 2020 and another 3 billion won in October last year, ostensibly as business loans.

While the June 2020 loan was used by Choi to acquire an unnamed medium-sized company, the last loan was made without any collateral from Choi and without an interest being charged, leading prosecutors to suspect that Kim simply transferred the money to Choi in an attempt to hide it from investigators.

Choi also participated in the acquisition of the SBW group by Kim Seong-tae, a former SBW chairman who is currently being investigated by prosecutors along with current Chairman Yang Seon-gil on suspicion of embezzling company funds and illegally paying Democratic Party (DP) Chairman Lee Jae-myung’s legal fees in a 2018 election law violation case.

Although Lee was acquitted of that charge by the Supreme Court in 2020, his lawyer allegedly received nearly 300 million won from SBW Group during the trial, and an additional 2 billion won in SBW stock that he could sell after three years.

Kim Seong-tae is also wanted for questioning over charges that he violated international sanctions on North Korea by giving regime leader Kim Jong-un a saddle made by luxury brand Hermès in late 2019 to clinch business deals with Pyongyang.

Kim fled the country on May 31 and is the subject of an Interpol red notice.

Tuesday’s raids also targeted the headquarters of Bae, Kim & Lee, a law firm that has represented Kim Man-bae since the investigation into the Daejang-dong scandal began last year.

Prosecutors confiscated a mobile phone belonging to an attorney at the firm on the suspicion that the lawyer was involved in the concealment of Kim’s funds.

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