Suwon Prosecutors Did Not Prosecute Jeong Young-hak, a Key Figure in the Daejang-dong Project, Despite Knowledgeof His Breach of Trust Involving Hundreds of Millions of Won in 2014

[경향신문]

On October 22 when the investigation into the Daejang-dong development project was ongoing, a janitor wipes the glass wall at the Seoul Central District Prosecutors’ Office in Seocho-dong. Seoul. Yonhap News

In 2014, the Suwon District Prosecutors’ Office knew of the breach of trust involving hundreds of millions of won by the accountant Jeong Young-hak, one of the key figures in the alleged bribery and corruption linked to the Daejang-dong development project in Seongnam-si, Gyeonggi, yet the prosecutors decided not to prosecute Jeong. The Seoul Central District Prosecutors’ Office launched another investigation into the Daejang-dong project last month, yet prosecutors maintained Jeong’s status as a witness. This has led to speculation that the prosecutors might have dropped the charges against Jeong in exchange for information on the crimes of his accomplices just like seven years ago.

According to the coverage by the Kyunghyang Shinmun on October 25, the Korea Deposit Insurance Corporation requested the Suwon District Prosecutors’ Office to investigate Yi Gang-gil, the CEO who led the Daejang Project Financing Vehicle (PFV) in the early stages of the Daejang-dong project, for embezzlement and breach of trust in 2014. At the time, the corporation submitted an investigation report which included criminal charges against Jeong--it stated circumstantial evidence suggesting that Jeong received fraudulent service fees from Daejang PFV through A, an accounting firm in which Jeong was a director.

According to the Korea Deposit Insurance Corporation, Jeong had received service fees of 242 million won for a contract on financial advice from January until April 2010. He received the money when business at A had been suspended for six months by the Financial Supervisory Service for aiding and abetting accounting fraud in October 2009. Due to the suspension, Jeong had also resigned from the board of directors. But the Insurance Corporation believes Jeong managed to get the money by pretending he had a service contract with Daejang PFV.

The Korea Deposit Insurance Corporation obtained a statement after questioning Yi Gang-gil, who said that they used the money they secretly hoarded to lobby politicians and government officials. Since Jeong was a director of Daejang AMC, a company linked to the Daejang PFV, in 2011, circumstances strongly suggested that he could have been Yi’s accomplice. But Jeong refused to cooperate with the investigation and the Korea Deposit Insurance Corporation notified the Suwon District Prosecutors’ Office of all the criminal allegations they managed to uncover by that time.

But the Suwon District Prosecutors’ Office did not put Jeong in court when they prosecuted nine people including Yi, who ordered the fraudulent service contract, related to the case. An official from the law enforcement agency familiar with the case said, “Prosecutors usually book and investigate the interested parties from the Deposit Insurance Corporation’s investigation report,” and added, “You can believe that the prosecutors were aware of the allegations of Jeong’s fraudulent service contract.” Among the people who stood on trial at the time, word got around that Jeong escaped prosecution with a plea bargain with the prosecutors.

Unlike the other accomplices, Jeong is not a suspect in the latest Daejang-dong investigation by the Seoul Central District Prosecutors’ Office, either. His name appears in the official letter of indictment against Yoo Dong-gyu, the former director of planning at the Seongnam Development Corporation, written by the investigation team at the Seoul Central District Prosecutors’ Office, but the only crime mentioned is bribery--his handing Yoo a bribe of 352 million won--which cannot be punished since the statute of limitation (7 years) has expired. On September 27, Jeong submitted nineteen recordings in the nature of a confession to the Seoul Central District Prosecutors’ Office. This triggered criticism that the prosecutors were letting Jeong go for his contribution in the investigation.

The investigation report that the Korea Deposit Insurance Corporation submitted to the Suwon District Prosecutors’ Office also mentions that the law firm B, in which attorney Nam Wook, another key figure in the Daejang-dong project, was the CEO, received fraudulent service fees of 830 million won. This is the exact amount stated by the Suwon District Prosecutors’ Office when it indicted Nam for receiving 830 million won to lobby the Daejang-dong project (violation of the Attorney-at-law Act). The prosecutors decided to drop the charge against Jeong for receiving fraudulent service fees, while putting Nam in court for the same criminal charge.