Hankyoreh in turmoil after reporter tied to Daejang-dong scandal

Hwacheon Daeyu owner Kim Man-bae arrives the Seoul Central District Prosecutors' Office on Monday. [YONHAP]

The editor-in-chief of the Hankyoreh newspaper resigned Monday after one of his senior reporters was sacked for borrowing money from a key figure in a major corruption scandal.

The editor, Ryu Yi-geun, stepped down to take responsibility three days after the newspaper issued a public apology for a loan made to a senior journalist by Kim Man-bae, who was indicted for bribery in the Daejang-dong development scandal in Seongnam, Gyeonggi, just south of Seoul.

Hankyoreh CEO Kim Hyun-dae has also said that he will resign in early February, as soon as the newspaper picks a successor, to take responsibility for what he characterized as a serious, self-inflicted wound to the company's image.

"The trust that Hankyoreh has most cherished is collapsing in an instant," Kim said in a statement sent to the newspaper's employees.

The Hankyoreh said its senior reporter, who has remained unnamed so far, borrowed 900 million won ($722,900) from Kim in 2019 and repaid 200 million won.

The amount he admitted to borrowing from Kim was 300 million won more than he initially acknowledged.

The newspaper said it decided to fire the reporter during a personnel review on Sunday after finding him guilty of failing to maintain integrity and fairness, as well as violating the company's own ethics guidelines and work rules to avoid conflicts of interest with news sources.

Kim Man-bae is the owner of Hwacheon Daeyu, a small asset management company that raked in 57.7 billion won ($48.3 million) in profit from an investment of 49.95 million won in the Daejang-dong real estate project, which was approved by the current head of the Democratic Party (DP), Lee Jae-myung, when he was mayor of Seongnam.

The company's outsized profit in relation to its miniscule stake in a mixed public-private consortium is the crux of the scandal. Several of Kim's acquaintances, as well as close aides of Lee, have been indicted by prosecutors on charges of bribery, embezzlement and breach of trust to skew the project's profit structure and payout scheme to benefit Hwacheon Daeyu and its affiliates.

Kim, a former journalist himself who interviewed Lee in 2014, attempted to acquire two media companies a few years ago, according to sources cited by Yonhap on Monday.

Kim reportedly tried to buy a private news agency in 2017 and 2018, when he was a reporter for Money Today, an online financial news service, but failed after the agency demanded 30 billion won as the price of its acquisition.

He then attempted to take over a newspaper specializing in legal issues in 2019, but also gave up due to differences on price, they said.

The newspaper confirmed Kim's bid but said it occurred in mid-2021, not 2019. The news agency refused to comment.

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