LH Speculation and the Issue of Fairness in Korean Society

서영진, 오유준, 최은지l승인2021.05.09l수정2021.05.09 22:40l386호 1면

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   On March 2021, suspicions of speculation were raised concerning employees of the Korea Land & Housing Corporation (LH). It was alleged that employees bought land before the ‘Gwangmyeong∙Siheung’ area was officially designated as a third new city. About 10 LH employees purchased 23,028㎡over 10 properties between 2018 and 2020. The lands have an estimated value of around 10 billion won. The police, who had been investigating LH employees’ speculation in Gwangmyeong∙Siheung, began their research into the matter on March 9 by conducting a search and seizure of official records and personal documents. Offices of the LH Gwacheon Uiwang Business Headquarters in Gwacheon-si, Gyeonggi-do, LH Gwangmyeong Siheung Business Headquarters in Incheon, and at the houses of 13 employees, who are suspected of speculation, were impacted by 67 investigators.

▲ The logo of 'Korea Land & Housing Corporation(LH)' (Photo from LH official website)
▲ LH Promotional Information Board was established in Dongtan 2 new town, Hwaseong-si, Gyeonggi-do. (Photo from ilyoseoul)

   The controversy intensified after the tactics used by LH employees in the speculation process were revealed. The government compensates landowners for the development of properties in designated new cities. The amount of compensation varies. For instance, an employee planted a lot of Salix Matsudana, a rare species, on the land which he bought with other employees. Salix Matsudana are normally planted by one tree per 3.3㎡, but the employee planted about 25 trees per square meter, because the department policy states that if there are many trees on the land that grow tall, the landowner is entitled to greater compensation than they would have received on empty land.

   LH employees also abused the ‘priority supply right for housing sites’ policy. This law states that if a landowner has more than 1000㎡ of land in a designated public business district, they can receive ‘priority supply rights for housing sites’ over ordinary people. Seven LH employees held over 5000㎡ of land which they divided into five areas of 1000㎡ of land each. Three parties owned 1,000 ㎡ each and the four others met the standards by combining their smaller shares of land under the same registration. To buy more than 1000㎡ of land, they had to submit a plan for farming the area and issue various certificates as proof. LH employees falsely declared their farming experience and filed plans saying they will grow rice, but instead planted other species like the Salix Matsudana tree.

   Before the LH investigation started, a high-ranking official of LH committed suicide. In addition, the Minister of Land, Infrastructure and Transport, Byun Chang-heum, resigned on April 16 after taking responsibility for the actions of his department. The speculation practices of LH officials is very serious matter. A government investigation team looked into the practices of more than 100,000 people, which include not only the Ministry of Land, Infrastructure and Transport staff and LH employees, but also their families and relatives. According to the month-long investigation, 746 people were suspected of speculation in real estate. Of the 746 people, 47 cases have been sent to the prosecutor’s office, and about 630 people are currently under investigation. Among the people under investigation, there are 140 government officials, including 10 local government heads, 44 members of the National Assembly and local Congress, and 38 LH employees. Until now, only 4 suspects, including officials in Pocheon City and LH employees have been found guilty of speculation using internal information and have been arrested. However, there are criticisms that the investigation team is making no noticeable progress. The government has responded to criticism saying they do not have enough manpower to deal with the wide range of investigations required.

   The National Assembly has prepared a bill to prevent recurrences of incidents like this. On April 14, the National Assembly passed the ‘Conflict of Interest Act’, a bill designed to prevent speculation in departments like LH. It prohibits the use of secrets that are known during the performance of one’s duties to gain property and other assets. The bill also advises public officials to avoid those who they know privately, that might have an interest in their duties, and to report them if those related to their duties transact money and valuables. The government also said it would introduce ‘the law-abiding watch system’ to strengthen the internal monitoring system of LH employees. The Ministry of Land, Infrastructure and Transport will soon announce a revision to the ‘Korea Land and Housing Corporation Act’. This revised bill regulates the authority and work scope of law-abiding officers. It is clear that various efforts are being made to prevent such incidents from happening again.

▲ A written apology from LH emphasizing that they will impose severe penalties on following violations and prepare preventive measures. (Photo from LH official website)

   In recent years, public resentment towards senior government officials deriving benefits by abusing their positions has grown. This is because of the growing number of cases of abuse of power being brought to light. For example, former Justice Minister Cho Kook was suspected of gaining the illegal admission of his daughter to a prestigious university. Students preparing for the entrance exam felt cheated by the position of privilege being abused. In addition, despite the government's efforts, real estate prices have not yet been stabilized, and it shocked the public to learn that government officials raised the price of housing leases before the upper limit law came into force last year. While different from the LH land speculation case, it is still another example of officials making unfair profits by using advance information. Many people criticized the LH case because it occurred during a time when real estate prices are unstable and most people are having difficulty buying their own homes.

   As public outcry continues over various unfair cases including the LH speculation, the public's interest in the prosecution's investigation is also increasing. After the LH speculation scheme became public, a joint investigation headquarters was set up that involved not only the police but also related agencies such as the National Tax Service and the Financial Services Commission. The office of the prosecutor was not included. This is because they are only granted the power to directly investigate six major crimes including bribery and violations of political funding laws; economic crimes; the contravention of laws governing public servants; election law breaches, crimes related to procurement projects and large-scale accidents. However, more and more citizens are requesting their participation in the face of ever-increasing suspicion of speculation by public officials. They argue that the newly implemented 6 point system needs to be supplemented with an exception clause to allow them to directly investigate more than just the six major crime areas with the approval of the minister. As public resentment over the LH speculation situation continues, the limitations of the office of the prosecution, are being highlighted.

   While it is difficult to prove the employees were involved in real estate speculation using advance internal information or simply participating in normal market speculation, in the eyes of the public the case is clear. Therefore, the first response should be to fill the loopholes in the existing laws. Korean society should no longer be stained by the unfair actions of individuals or by collective corruption. A legitimate society should be established that rewards those who make honest efforts and punishes those who profit unfairly by abuse or their positions of privilege.


서영진, 오유준, 최은지  dankookherald@gmail.com
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