Lee Jae-myung's 'hidden stake' in project described at trial

A key figure in the Daejang-dong corruption scandal said Monday he heard that Democratic Party (DP) leader Lee Jae-myung held a hidden stake through one of the investors in the project.

Lawyer Nam Wook, a key figure in the Daejang-dong development corruption scandal, is surrounded by reporters as he walks to his trial at the Seoul Central District Court in Seocho District, southern Seoul on Monday. [YONHAP]

A key figure in the Daejang-dong corruption scandal said Monday he heard that Democratic Party (DP) leader Lee Jae-myung held a hidden stake through one of the investors in the project.

Lawyer Nam Wook made the allegation at his trial on the Daejang-dong case at the Seoul Central District Court, hours after he was released from jail at midnight Sunday after his detention period expired. Nam is charged with breach of trust and bribery in the case.

His case is believed by prosecutors to be part of a larger conspiracy concerning astronomical profits raked in by Hwacheon Daeyu, a previously obscure asset management company, and its Cheonhwa Dongin affiliates, from minuscule investments in a 2015 real estate development project in the Daejang-dong area of Seongnam, Gyeonggi, as well as suspicions about their true ownership.

Hwacheon Daeyu raked in a profit of 57.7 billion won ($48.3 million) on an investment of 49.95 million won, which was a 1 percent stake in the project’s mixed public-private development consortium. The company also collected 300 billion won from sales of apartments in the development, while its Cheonhwa Dongin affiliates reaped in an additional 400 billion won in revenue.

During his trial, Nam said he had known since February 2015 that Cheonhwa Dongin No. 1 "belonged to" the Seongnam mayor’s office, then occupied by current DP leader Lee, and that he heard this from Kim Man-bae, the owner of Hwacheon Daeyu.

Suspicions regarding the project’s profit structure have centered around the relationship between Lee and Kim, who as a journalist interviewed then-mayor Lee in 2014. Lee and Kim have both denied they have any kind of financial relationship.

Nam said he had not given information about Cheonghwa Dongin No. 1's ownership to investigators from the prosecution service for fear of political retaliation if Lee had succeeded in winning the presidency earlier this year.

“[At the time I was arrested], there was an election going on, and I was too scared and shocked to speak the truth,” Nam said when asked why he did not offer more details.

While Kim himself has claimed he is the owner of Cheonhwa Dongin No. 1, others such as accountant Jeong Young-hak and Yoo Dong-gyu, former acting president of the Seongnam Development Corporation, have not only changed their testimonies and said that Lee owns a hidden share in the company, but also said that they promised to pass on 42.8 billion won to Lee through his close acquaintances.

While Kim himself has claimed he is the owner of Cheonhwa Dongin No. 1, other key figures in the corruption case, such as accountant Jeong Young-hak and Yoo Dong-gyu, former acting president of the Seongnam Development Corporation, have said that they promised to pass on 42.8 billion won to Lee through his close acquaintances.

Nam also testified that he acted as an intermediary to deliver 352 million won to Yoo, who in turn allegedly turned the money over to two of Lee’s aides, Jeong Jin-sang and Kim Yong.

Both Jeong and Kim have been arrested under suspicion of committing corruption and bribery in the case.

Jeong, who was arrested Saturday, is also suspected of aiding and abetting the destruction of evidence by telling Yoo to throw his mobile phone out the window when prosecutors were about to raid Yoo’s residence late last year.

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