Seongnam mayors’ controversial real estate projects

Oct 07, 2021, 08:21 am

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Gyeonggi Governor Lee Jae-myung waves at supporters on his way to attend a council meeting of the province in Suwon on Oct. 5, 2021./ Source: Yonhap

AsiaToday reporter Kim Hyun-goo

The scandal over the development project in Daejang-dong, Seongnam, is showing signs of expanding to the Baekbyun-dong redevelopment project. At the time of the development of both Daejang-dong and Baekhyun-dong, Gyeonggi Governor Lee Jae-myung was by-then Seongnam mayor. The dispute over the redevelopment projects in Seongnam, where former and current mayors are involved, has been ongoing for 20 years.

According to the legal community on Wednesday, a private operator ‘A’, who purchased the site in Baekhyun-dong previously owned by the Korea Food Research Institute (KFRI), made more than 300 billion won in sales from the apartment development project through usage change.

The Baekhyun-dong project is a project that developed the site of the KFRI, which moved to North Jeolla Province, into an apartment complex. Since it was a green zone that has been made into a natural preserve, it was impossible to build an apartment complex and the business feasibility was low. However, as the usage of the site was changed to a quasi-residential area, the appraisal value more than doubled.

The private operator had purchased the site for 218.7 billion won, but collected profit of 1.264 trillion won by selling apartments. By then, Seongnam City permitted the usage change of the site citing that it was construction of rental apartments, however it is known that the actual sale was conducted as a general apartment sale.

The person in charge of designating zones and notifying for the project was Lee Jae-myung, who was by-then the mayor of Seongnam City. The KFRI claims that it had sent an official letter on behalf of Seongnam City asking to change the usage of the site from public rental housing to general sale. Observers doubt that Gov. Lee could have exercised his influence to change the usage of the site.

The controversy over preferential treatment over the development of Seongnam City has been ongoing for 20 years. In May 2000, Seongnam City changed the usage of Baekgung and Jeongja’s central commercial districts, allowing development company H1 Development start the Parkview Apartment Complex project. Allegations of real estate corruption were raised in 2001 when Gyeonggi Province gave approval in advance to Parkview Apartment Complex to allow more households to reside than the law stipulated, and that some lawmakers purchased some apartments. By-then Seongnam mayor Kim Byung-ryang was indicted on charges of requesting an architectural firm, who helped his election campaign, provide Parkview design services and was sentenced to one year in prison and two years of probation.

Former mayor Lee Dae-yeop also caused problem with a redevelopment project. He received a bribe of 80 million won for allowing a specific company to receive an approval to purchase industrial land in Pangyo. He was also charged with receiving 50 million won from another real estate developer and providing various conveniences such as licenses and permits. He was sentenced to four years in jail.

Experts cited the geographical location of Seongnam and characteristics of the real estate business as the main cause of the controversial real estate development scandals for decades.

#Seongnam mayor #Lee Jae-myung #real estate