Prosecutors raid locations related to allegations against PPP lawmaker

Politics

Prosecutors raid locations related to allegations against PPP lawmaker

Published: 11 Apr. 2023, 18:40

Former People Power Party lawmaker Kwak Sang-do speaks to media as he leaves the Seoul Central District Court in Seocho District, southern Seoul following his trial on Feb. 8. [YONHAP]

Prosecutors raided ten different locations on Tuesday as part of their probe into allegations that former People Power Party (PPP) lawmaker Kwak Sang-do and his son received a large bribe from a company at the center of the Daejang-dong development corruption scandal.

Although Kwak was acquitted in February of charges that he received 5 billion won ($3.8 million) from the Hwacheon Daeyu asset management company in the form of severance pay for his 32-year-old son Kwak Byeong-chae in return for political favors, prosecutors carried out the raids to gather additional evidence before the case goes on to appeal.

The younger Kwak worked at Hwacheon Daeyu as a mid-level employee for seven years before leaving the company.

Locations raided by investigators from the Seoul Central District Prosecutors’ Office on Tuesday included the offices of Hoban Construction and Bookook Securities.

Prosecutors suspect that Kwak not only helped Hwacheon Daeyu form a consortium with KEB-Hana Bank to bid for the Daejang-dong project in return for his son’s sizable severance pay, but also pressured the bank to refuse an offer by Hoban Construction to form an alternative consortium.

Bookook Securities was also allegedly approached to participate in the alternative consortium, but turned down the offer.

Through the consortium led by KEB-Hana Bank, Hwacheon Daeyu was able to land the 1.5-trillion-won Daejang-dong development project shortly after it was launched by the Seongnam city government, despite only having 50 million won in capital and no prior record of participating in real estate developments

Hwacheon Daeyu pocketed 400 billion won in profit from the development despite having invested only around 350 million won in the project, while the Seongnam Development Corporation, which is owned by the city government, only pocketed 183 billion won despite its 25-billion-won investment in the development.

Hwacheon Daeyu also made 300 billion won in apartment sales from the development, while its Cheonhwa Dongin affiliates reaped an additional 400 billion won in profits.

Prosecutors raided Hoban Construction and Bookook Securities in search of evidence that Kwak exercised his political influence to prevent a consortium from forming that might compete with the group that included Hwacheon Daeyu.

In its first ruling since Daejang-dong allegations surfaced, the Seoul Central District Court acquitted Kwak of bribery in February

The court acknowledged that the severance payment handed to his son was exceptionally large under most employment terms, but said prosecutors had failed to prove that it was provided in return for favors.

But Kwak was fined 8 million won for accepting 50 million won in what the court deemed to be an illegal political contribution from Nam Wook, a lawyer central to the Daejang-dong case, while running for a National Assembly seat in April 2016.

Nam, whom prosecutors believe is the owner of Cheonhwa Dongin No. 4 and is currently standing trial in the Daejang-dong case, was fined 4 million won as part of the guilty verdict against Kwak.

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