Asset company's execs are raided in Daejang-dong case

Politics

Published: 19 Jan. 2023, 17:49 Updated: 19 Jan. 2023, 17:50

Asset company's execs are raided in Daejang-dong case

The entrance to the building housing the office of Hwacheon Daeyu, a small asset management company whose executives were raided by the state prosecution service on Thursday [JANG JIN-YOUNG]

Prosecutors on Thursday raided the homes and offices of executives of a small asset management company at the center of the Daejang-dong corruption scandal on suspicion of concealing the company's profits in the development.

The Seoul Central District Prosecutors’ Office said those raided are suspected of helping Kim Man-bae, the owner of the Hwacheon Daeyu company, conceal profits reaped by the company from its investment in the Daejang-dong real estate development in Seongnam, Gyeonggi.

Hwacheon Daeyu raked in 57.7 billion won ($48.3 million) in profit from an investment of 49.95 million won in the 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 the mixed public-private consortium is the crux of the scandal. Several of Kim's acquaintances, as well as aides close to Lee, have been indicted 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.

Prosecutors on Jan. 2 arrested Hwacheon Daeyu CEO Lee Han-seong and senior executive Choi Woo-hyang on charges of concealing 27.5 billion won on Kim’s behalf.

Meanwhile, the Seoul Central District Prosecutors’ Office said Thursday that it will ask Lee Jae-myung to appear for at least two days of questioning by investigators probing the Wirye New Town and Daejang-dong developments.

Lee said Wednesday that he would obey the summons, but would appear on Jan. 28 and not Jan. 27, as originally requested by prosecutors.

The Wirye New Town development and the Daejang-dong development, which began in 2013 and 2015 and are both located in Seongnam, Gyeonggi, are the subject of separate probes by prosecutors, who are investigating allegations of preferential investor treatment and skewed profit distribution in both.

Lee was questioned for 12 hours on Jan. 10 at the Seongnam branch of the Suwon District Prosecutors’ Office in another case investigating alleged illicit donations by six companies to Seongnam’s football club during his term as the city’s mayor.

Lee claimed the donations were legitimate sponsorships that benefited Seongnam citizens by attracting investment to the city and saving its taxpayers from having to underwrite the troubled football club.

But prosecutors in that case suspect that the donations were bribes for preferential business treatment, and that some of the money went to Lee himself.

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