First lady's unique presence a double-edged sword

Though stock manipulation allegations are nothing new, bill emerges as potent weapon for opposition party

First lady Kim Keon Hee is seen after landing at Amsterdam Schiphol Airport as she accompanies President Yoon Suk Yeol on a state visit to the Netherlands, Dec. 11. (Yonhap)

First lady Kim Keon Hee has arguably been the most active spouse to a South Korean president to date, advocating strongly for the protection of the environment and animal rights, as well as for the global promotion of Korean culture.

The 51-year-old had built a successful career as an art exhibition investor and organizer before her husband took office in 2022.

Since Yoon took office, she actively engaged with the public, but controversies surrounding her have become the opposition's latest weapon against the ruling party, with the April parliamentary election drawing closer.

The Democratic Party of Korea repeatedly raised allegations of stock manipulation against Kim throughout last year. This culminated in the opposition-led National Assembly’s passing of a special investigation bill last month, to open a special investigation into the accusations.

Yoon vetoed the bill just last week, alongside another special investigation proposal tied to a separate bribery case concerning a high-profile land corruption scandal in Seongnam, Gyeonggi Province.

But the opposition efforts have resonated with the public, with many voters appearing to doubt the first lady. A survey jointly released by Gallup Korea and Joongang Ilbo on Jan. 1, showed that 65 percent of Koreans believed that Yoon should not veto the investigation bill into the first lady. Some 25 percent said they would support Yoon’s veto, while 10 percent refused to answer. The survey involved 1,017 Korean nationals aged 18 or older.

Experts say that the allegations could cause problems for the ruling party ahead of the elections. The Democratic Party is likely to continue to attempt to weaponize this issue, they explained.

With controversy building, the first lady has been absent from the public eye since mid-December. Her last public appearance was returning from the Netherlands, where she accompanied Yoon on a state visit.

Lack of evidence

The allegations that Kim may have orchestrated the price manipulation of local BMW distributor Deutsch Motors between 2010 and 2012 are not new.

Top prosecutors during the previous Moon Jae-in administration investigated the case for 19 months starting around April 2020, but failed to find any evidence of wrongdoing.

In October last year, the Seoul Central District Court ruled that the existing evidence against Kim could not prove that she and her mother Choi Eun-soon either orchestrated or were involved in the stock manipulation.

The court, however, admitted that Kim and her mother’s stock accounts were both “used in the stock manipulation process,” but said the evidence was insufficient to prove that she had deliberately been involved in stock manipulation

The court, on the other hand, sentenced an investment adviser and Blackpearl Invest director, who was accused of playing a key part in the stock manipulation, to 18 months in prison on three years of probation and slapped him with a 150 million-won ($113,700) fine, on charges including violation of the Capital Markets Act.

But the case is still open.

“The latest court decision merely means that the current evidence obtained and presented to the court by prosecutors is insufficient to determine Kim’s part in the crime,” an attorney, who requested anonymity said.

“If further evidence is collected, it could spark another round of investigation and legal battles."

Unfinished Business

Despite the current lack of evidence against the first lady, political commentator Lee Jong-hoon told The Korea Herald it was unlikely that the main opposition party will leave her alone.

“The Democratic Party has nothing to lose by continuing to mention Kim,” Lee said Monday.

“It could rattle the entire election, if the main opposition finds additional evidence against Kim regarding the matter. If not, then they would continue to push for another revote because they acknowledge the growing doubt among the voters,” he added.

Lee highlighted the need for the presidential office and the ruling party to actively manage the risks associated with the ongoing allegations against the first lady.

He proposed to reestablish the office of the first lady, which Yoon abolished upon taking office in March 2022. The decision was based on Kim’s pledge to serve as only “the wife of Yoon and not a first lady,” during Yoon's presidential campaign.

“What voters are concerned about is the seeming lack of control and management in the presidential office,” Lee explained.

“The piling allegations including the current investigation into the suspicions that Kim improperly took a Dior bag from a pastor last year have been fueling the concerns.”

The People Power Party's new Interim Chairman Han Dong-hoon has expressed a similar view, saying that he also believes the office of the first lady needs to be reestablished.

"I believe the office needs to be reestablished," Han told reporters after an event in Changwon, South Gyeongsang Province, Wednesday.

"The presidential office is planning to thoroughly review the matter," he added.

Han also said that the ruling party was open to negotiating the possible appointment of an independent inspector general, tasked with monitoring corruption cases involving the president's relatives and families.

People Power Party Rep. Choi Jae-hyung echoed Han's sentiments.

“We need to clearly display our willingness to resolve the noise surrounding the family members of our president by relaunching the office,” Choi replied in a radio interview when asked about the risks stemming from the allegations against the first lady ahead of the elections.

Observers predict the Democratic Party to delay the revote on the vetoed investigation bills as much as possible to maximize the noise made over the first lady. The ruling party pushed for the revote to take place during Tuesday’s plenary session, but failed.

Kim is the current CEO and president of an art exhibition company Covana Contents. She earned her bachelor’s degree at Kyonggi University and later earned an executive MBA at Seoul National University.

Covana Contents was an investor behind a 2012 Vincent Van Gogh Exhibition held in Seoul, which attracted 820,000 visitors. She tied the knot with Yoon in 2012.

By Jung Min-kyung(mkjung@heraldcorp.com)