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01.11.2022 Author: Konstantin Asmolov

Is Lee Jae-myung heading for the premiership or for prison?

On August 28, 2022 the Democratic Party of Korea, currently the main opposition party in South Korea, elected Lee Jae-myung, a former presidential candidate, as its new Chairman. He obtained 77.77% of the votes.

 His victory means that he has the support of the largest faction in the Democratic Party, and in a survey carried out by Gallup Korea at the beginning of September 2022, 27% of respondents chose him as the person who they would most like to see as the next President of the country.

It seems as if his moment has arrived. However, it is significant that even before his election as Chairman of the Democratic Party, the media were full of headlines such as “Lee seeks party leadership for self-protection,” as at the moment he is perilously close to being charged in a number of criminal cases, which are the subject of this article.

Involvement in corruption scandals connected with construction projects in Seongnam

NEO has already published articles on the scandals connected with the construction of property in Daejang district in Seongnam on more than one occasion.

On July 22, 2022 South Korea’s Board of Audit and Inspection (BAI) became aware of another violation in relation to development, this time in the Baekhyeon district of Seongnam. In 2015 the city authorities decided to promote a public-private sector construction project, but then the next year withdrew, thus enabling the private developer to earn profits of 314.2 billion won ($239 million).

On October 20, 2021 Lee Jae-myung claimed that the Ministry of Land, Infrastructure and Transport had requested the state to support the Baekhyeon district project. But the police investigators believe that this was a lie, and thus a violation of election law, and on August 29 they sent the investigation file to the public prosecutor, which has launched a criminal case.

On September 1, with the limitation period for the case due to expire on September 9, Lee Jae-myung was called in for further questioning.

On September 8, the day before the expiry of the limitation period, Lee Jae-myung was charged with a violation or electoral law in connection with his lying, and on September 26 the public prosecutor opened a new criminal case against three of his close associates, Yoo Dong-gyu, the former acting president of Seongnam Development Corp., Nam Wook, a lawyer, and Jeong Young-hak, an accountant, all of whom were implicated in the Seongnamgate scandal.

Lee Jae-myung’s wife accused of improper use of company credit card

 Kim Hye-kyung, Lee Jae-myung’s wife is also at the center of a scandal, which relates to her use of an official credit card belonging to the Gyeonggi provincial government for personal purchases and to buy food, while her husband was the provincial governor. According to an anonymous source, she also pressurized provincial civil servants to run errands for her, and instructed Bae So-hyeon, a civil servant and her de facto personal secretary, to use a Gyeonggi Province government credit card to pay for Kim Hye-kyung’s food orders. According to reports, Bae is accused of misusing funds totaling 20 million won ($14,850) in 150 separate incidents, including some 2 million won spent on Kim Hye-kyung’s personal purchases.

On September 8, the prosecutors formally charged Bae. The previous day Kim Hye-kyung, “suspected of tacitly approving the misuse of funds by her former secretary,” was questioned by the prosecutors.

Kim Hye-kyung is also charged with violating election law, in that in August 2021 (that is, after Lee Jae-myung was named as candidate for the presidency) she spent some 100,000 won on entertaining three Democratic Party members, plus her driver and lawyer, in a restaurant.

Lee Jae-myung apologized on behalf of his wife.

The receipt of illegal donations to Seongnam football club

On September 13 the police completed their investigation into charges that, in exchange for sponsoring the advertising expenses of Seongnam Football Club, Lee Jae-myung, at the time mayor of Seongnam, had allowed the Doosan Engineering & Construction Co to change the permitted use of a land plot in order to sell it at a substantial profit. The plot in question was originally purchased for 7 billion won and is now valued at 1 trillion won. The football club also received substantial contributions from five other organizations – the SNA Pundan Medical center, the Alpha Dome City Co., the Hyundai Department Store, Naver Corp. (South Korea’s top Internet search engine) and Nonghyup Bank.

The police concluded that Lee Jae-myung could be charged with bribery, and on September 16 prosecutors conducted searches at Doosan Engineering & Construction Co. and 20 other organizations, including the football club and Seongnam City Hall, and seized documents connected with the case.

The defense industry shares case

This case, which has only just begun, relates to Lee Jae-myung’s acquisition of 1670 shares in Korea Shipbuilding & Marine Engineering and 690 shares in Hyundai Heavy Industries, with a total value of 235 million won ($161,000). He made the purchases shortly after the parliamentary elections and his appointment to the National Assembly’s Defense Committee. However, he failed to mention the purchase in his income declaration, and the purchase involved a conflict of interest (in that his position meant that the had a direct influence over the companies in which he purchased the shares).

When the purchase was revealed, he quickly sold the shares, but nevertheless the Conservatives called on the National Assembly’s Ethics Committee to take disciplinary measures against Lee Jae-myung. “Graft charges do not go away even if someone received a bribe and returned it,” said Kim Mi-ae, a spokeswoman for the People Power Party.

Four mysterious deaths

The Conservatives allege that the lack of direct evidence against Lee Jae-myung is linked to the fact that four witnesses in the case against him have died in the last 8 months. Conservative media sources have looked into the deaths:

Body number 1. Yoo Han-gi, head of the Pocheon Urban Corp., a regional development company, was found dead not far from his home on December 10, 2021.  In 2015 he was serving as a senior manager of the Seongnam Development Company, and at the time of his death he was facing charges related to the Seongnamgate affair. Allegedly he had been paid 200 million won ($167,000) in bribes to carry out lobbying activities. He was also accused of resorting to corruption to secure the resignation of the previous General Director and his own appointment to that position.  His suicide occurred the day before he was due to testify in court, and the prosecutor had already issued an order for his arrest.

Body number 2. On December 21, 2021 the police discovered the body of Kim Moon-ki, head of the Seongnam Development Corporation, who was alleged to have played a key role in removing from the project agreement a clause allowing the municipal government to recover excessive profits from private investors, and to have helped the developer to win a construction contract in the city’s Daejang district.  In October 2021 he was questioned as a witness in the case, but his death, the second death of a key figure in the Seongnamgate case, made it impossible to prove that Lee Jae-myung was deeply implicated in the corruption scandal. Still, Lee Jae-myung’s claim that he did not know Kim Moon-ki provided the prosecutors with grounds for charging him with lying to investigators.

Body number 3. On January 11, 2022 Lee Byung-chul was found dead. He had earlier accused Lee Jae-myung of using money provided by another person to pay his defense lawyer’s fees and costs in his 2018 case on alleged violations of election law, thus in effect, accepting an indirect bribe. Lee Byung-chul provided investigators with decrypted messages confirming his allegation.  Lee Byung-chul was a key witness in the case involving payments to the legal team defending Lee Jae-myung against charges that he had abused his authority when serving as mayor of Seongnam in order to have his own brother, who had criticized him, admitted to a psychiatric hospital.

On December 10, 2021, when Yoo Han-gi’s body was found, Lee Byung-chul had expressed fears for his own safety. According to people who knew him, Lee Byung-chul was a heavy drinker, and family members claimed that he had been threatened, but the police said that they found no suspicious circumstances relating to his death, and the coroner’s report stated that he had died of heart failure.

Body number 4. Kim Hyun-wook died on July 26, 2022 He was a former military intelligence officer and served as a non-executive director of the Gyeonggi Province Institute of Science & Technology Promotion when Lee Jae-myung was the regional governor. He lived in a building owned by Bae So-hyeon (it was there that his body was found) and was a potential key witness in the criminal case against Kim Hye-kyung, as Bae Sung-hyun had instructed him to use the government credit card to pay for the purchases. Kim Hyun-wook was also Kim Hye-kyung’s driver.  As in the case of Kim Moon-ki, Lee Jae-myung denied that he knew the deceased, but this was later proved to be a lie.

So again we are faced with the question of who to believe. Officially, two of the deaths were suicides, and two were natural deaths, and it is clear that if there had been any obvious signs of violence then criminal cases would have been opened. But in reality there are a lot of coincidences and under Moon Jae-in’s government police departments became heavily dependent on local officials. For both Democrats and Conservatives, everything is perfectly clear.

In addition to Lee Jae-myung, as former governor of Gyeonggi Province, a number of his associates have been charged. This point is worth emphasizing, because even through there was no direct link, the Democrats argue that in such a case the boss could not have been unaware of what his subordinates were doing, and that he should nominally be held responsible for allowing them to behave as they did.

The Eun Soo-mi case

On September 16, 2022 Eun Soo-mi, a former subordinate of Lee Jae-myung who was Secretary of Women and Family under Moon Jae-in and then Mayor of Seongnam between 2018 and 2022, was sentenced to 2 years in prison and fined 10 million won ($7,200) for taking bribes and abuse of authority.

The Suwon District Court found her guilty of providing services for the personal benefit of a police officer back in 2018 – she awarded a 450-million won contract to replace street lighting to a non-approved company in exchange for inside information about the police investigation into her alleged violations of the law on political funding.

Eun Soo-mi is also accused of falsifying electoral results and having links with local organized crime groups, but these allegations have not yet been proved. She is suspected of receiving money from the criminal groups and awarding lucrative construction contracts in exchange for information from the police which enabled her to cover up her criminal activities.

The Lee Hwa-young case

On September 13 the South Korean media reported that Lee Hwa-young, former vice governor of Gyeonggi Province, was being investigated for allegedly taking bribes from the clothing company Ssang Bang Wool.

Lee Hwa-young is suspected of spending some 100 million won ($72,300) using company credit cards belonging to Ssang Bang Wool during his term in office. The total amount of the bribes, which included his credit card spending and a luxury car, was some 250 million won ($175,315). Ssang Bang Wool also appears to have funded a South-North Korea exchange event organized by Lee Jae-myung, and also paying his lawyers’ bills.

On September 28, 2022 Lee Hwa-young was arrested and the prosecutors released to the media details on his attempts back in 2018 to sell to North Korea goods – under the cover of providing humanitarian aid. The goods were to be delivered to the Chinese customs post in Dandong, then resold in China, with part of the proceeds then being sent to North Korea by means of various illegal schemes. Unfortunately it is unclear if the scheme was carried out successfully.

The above scheme attracted a lot of media attention, as Lee Jae-myung was governor of Gyeonggi Province at the time. Under the existing sanctions, North Korea cannot receive or obtain foreign exchange, and the scheme appeared to be designed to bypass these sanctions. The prosecutors at present believe that Lee Jae-myung was not involved in the scheme.

            On October 17 prosecutors organized a search of Ssang bang wool’s headquarters as part of their investigation into alleged currency smuggling: the company has been accused of secretly sending billions of US dollars to China back in 2019, in breach of foreign currency control laws. It is believed that dozens of Ssang bang wool’s employees, while traveling on business trips to China, took US dollars with them, hidden inside books. The prosecutors are investigating the possibility of the money having been sent to North Korea – which seems all the more likely given that Ssang bang wool had signed an agreement on economic cooperation with North Korea.

“This means war”

Yoon Suk-yeol is, it seems, deliberately closing his eyes to the scandals involving Lee Jae-myung. For example, on September 2 he refused to comment on the fact that Lee Jae-myung had been called in for questioning by prosecutors, claiming that he was focused on economic matters and did not have time to follow the news in detail.

The Democrats, in turn, argue that the fact that their party leader has been issued with a summons to appear before prosecutors “clearly shows the intention of President Yoon, who is a former prosecutor general and whose purpose for the presidency was investigation, not state affairs”. One Democratic representative, Jung Chung-rae, even compared Yoon Suk-yeol to Chun Doo-hwan, the former dictator of the 1980s. He also tweeted: “This means war. Let’s fight and win.”

 The ruling People Power Party, which is stepping up the pressure on Lee Jae-myung, also sees its campaign as a “war” – the prosecutors are fighting a war against crime, irrespective of a person’s past services to the state or considerations of political revenge.

  Of course, the attempts to prosecute and imprison Lee Jae-myung could be seen as a political vendetta, but, in all fairness, it should be remembered that Moon Jae-in, for whom Lee Jae-myung was a major rival, also tried to have him prosecuted. A number of cases have been launched in relation to construction scandals during Lee Jae-myung’s term of office as mayor, generally shortly before the expiry of the limitation period, and the dodgy dealings of his wife and assistants have been investigated, but he has managed to avoid being directly implicated. On the other hand, the Democrats have also demonstrated a similar thirst for justice against their political rivals in comparable situations, and if one were to remember the statements made by Lee Jae-myung and his associates during the Candlelight Demonstrations, it is tempting to see the current cases as a kind of political karma. But the accusations against him do seem to be better founded than those that were leveled against Park Geun-hye.

But if Lee Jae-myung is convicted and imprisoned then the Democratic Party would be deprived of their leader and Korea’s political left, at least in its current form, which dates back to the Roh Moo-hyun and Moon Jae-in administrations, would be thoroughly discredited.  That is why the Democrats will fight this “war” with everything they have got.

Konstantin Asmolov, PhD in History, leading research fellow at the Center for Korean Studies of the Institute of China and Modern Asia, the Russian Academy of Sciences, exclusively for the online magazine “New Eastern Outlook.


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