Lee Dong-kwan reaped in billions of won in redevelopment profits, while his wife served as a delegate in the reconstruction association with 1% of shares

Lee Dong-kwan, special advisor to the president on external relations nominated for the chair of the Korea Communications Commission, extends his greetings in the press briefing room at the Office of the President in Yongsan, Seoul on July 28. Yonhap News

Lee Dong-kwan, the nominee for the new chairperson of the Korea Communications Commission, reported his property valued at over 5.1 billion won. This was nearly three-fold the property he reported in 2009-2010, when he served as the Cheongwadae spokesperson and the presidential press secretary in the Lee Myung-bak government. The reason Lee was able to increase his wealth so significantly was largely because of profits he earned from the reconstruction of an apartment in Jamwon-dong, Seoul. In 2010, when the apartment reconstruction association was established, Lee handed 1% of his shares to his wife, making her eligible as a delegate in the association.

According to the coverage by the Kyunghyang Shinmun on August 2, Lee Dong-kwan sold an apartment in Jamwon-dong, Seocho-gu, which he had purchased in July 2001, for 3.19 billion won in November 2019. According to the list of property he reported when serving as the Cheongwadae spokesperson and the presidential press secretary in the Lee Myung-bak government, the value of the apartment was 1.08 billion won in March 2009 and 968 million won in April 2010. When he bought the apartment in 2001, the market price was around 400-500 million won. In other words, Lee was able to earn a profit of around 2.7 billion won thanks to one “smart” home.

The redevelopment of the apartment was first promoted in 2010 and construction was completed in June 2019. Lee resided in the apartment until 2006, which was before the decision was made to rebuild the apartment. He then leased the apartment and relocated several times to apartments in the Seocho area.

Lee was actively involved in the reconstruction process, attending the meeting of reconstruction association delegates. Lee’s wife, Kim (59), became a delegate in a general meeting of the association in 2012 and exercised her decision-making rights by attending meetings in person and in writing until the association disbanded in 2021. The reconstruction association delegate makes decisions on major issues concerning the rebuilding of the apartment complex, such as selecting the construction company and partner firms. The delegates decided to receive 60 million won as a reward for their “management performance” after the reconstruction, but the plan collapsed due to the association’s situation later.

According to the register of the apartment in question, Lee was named as the owner of the entire share of the apartment, but in April 2010, when a committee was launched to establish the reconstruction association, he gave 1% of his share to his wife, Kim. The 1% was the minimum requirement to become a delegate in the association. The fact that Lee gifted his wife 1% of the apartment was not reflected in the list of property released when Lee stepped down as the press secretary in September 2010.

One redevelopment expert with an office in Seoul said, “Giving his wife 1% of his share when the association was being formed seems like a scheme to have her as a representative in the association.” One real estate agent said, “Giving someone 1% of the property is a method mostly used by clever players to minimize the gift tax and to hand over one’s association membership.”

Lee appears to have steadily increased his property with the profits from the redevelopment. According to the information for the confirmation hearing he submitted to the National Assembly on Wednesday, Lee reported property valued at 5,107,510,000 won owned by himself, his wife, and his children. This was nearly 3.4 billion won more than the property he reported in 2010 (1.7 billion won). Lee and his wife have joint ownership of an apartment (115m2) in Gaepo Xii Presidence, a complex in Gaepo-dong, Gangnam-gu. This apartment was also recently redeveloped after Lee purchased it in 2016. The market value of the apartment, which Lee reported as 1,513,240,000 won, is said to be over 4 billion won.