Assets hurt nominees in South Korea

In his inaugural address this week, President Lee Myung-bak used the story of his own escape from poverty to urge fellow South Koreans to “work hard to realize their dreams.” He recalled how, as “a boy from the countryside who could not even eat regular meals,” he rose to become a successful businessman and eventually won the top job in the land.

But in recent years there has been a quicker way to get rich in South Korea: real estate speculation. The easy wealth has raised suspicions of collusion between builders and the politicians and bureaucrats who approve new developments, creating the perception that anyone with an extensive real estate portfolio must be cutting corners.

So South Koreans were instantly leery when they learned that several of Lee’s 15 Cabinet nominees held large real estate portfolios, and that the average personal wealth of the would-be ministers was $4.1 million. The questions have caused several nominees to bow out and have embarrassed the new president just three days into the job.

“Big real estate portfolios may not be a big deal for a Western politician, but in [South] Korea it is seen as evidence of speculation and corruption,” said Yang Sung-mook, an advisor to the opposition United New Democratic Party.

“Ask anyone in Korea,” said Yang. “With our history of corruption, nobody believes that these politicians accumulated all that wealth through hard work.”

The political storm surrounding Lee’s nominees was triggered by a new law requiring high-ranking officials to disclose their personal assets. Declarations from the Cabinet nominees and data leaked to the media show that most of Lee’s nominees owned two or more houses, some with extensive tracts of land suggesting that they may have been engaged in speculation.

Now, Lee’s choice of Han Seung-soo for prime minister hangs by a thread, with the nominee wounded by allegations of property speculation and tax evasion. A parliamentary vote is scheduled Friday.

And on Wednesday, two Cabinet nominees withdrew just hours before what were expected to be deeply embarrassing parliamentary hearings on their appointments.

Park Eun-kyung, nominated for environment minister, stepped back after reports that she once sold property zoned as farmland to a developer.

To avoid speculation, South Korean law requires that such land be farmed at least 90 days a year. Park had never been a farmer.

Nam Joo-hong, a professor nominated to lead the ministry responsible for unification issues with North Korea, withdrew after reports that his wife owned a ginseng field north of Seoul worth $2.2 million. The revelation was a damaging blow to an appointment already in trouble because of Nam’s fierce opposition to rapprochement with North Korea, and from news that his son had acquired U.S. residency, gaining an exception from compulsory military service.

Those pullouts followed Sunday’s announcement by putative gender equality minister Lee Chun-ho that she was withdrawing her name because of questions about real estate speculation. She and her sons were found to own more than 40 properties across the country.

All three former nominees blamed the media and opposition parties for using South Koreans’ suspicions about real estate to taint them with what they said were unfounded allegations.

“I thoroughly explained the charges of real estate speculation, but one-sided news reports continued and eventually brought trouble to the president,” Nam said in a statement explaining his withdrawal.

But President Lee’s office acknowledged Wednesday that top officials of his own Grand National Party had been alarmed by the growing storm over ethics, and had encouraged him to jettison the controversial nominees. With the party facing parliamentary elections in April, the officials were eager to stifle discussion of real estate profiteering before it jeopardized a vote they expect to win.

Real estate is a sensitive issue in South Korea, where soaring land prices are pushing home ownership out of the reach of millions of young adults or forcing them to live in cramped apartments a long commute from their jobs. In that atmosphere, anger against politicians and others perceived to be abusing their insider positions is easily stoked.

Lee’s advisors appeared to recognize the peril of pressing ahead with nominations of people identified in the public eye with land speculation.

Announcing 61-year-old social worker Byun Do-yoon as the new nominee for gender equality minister, presidential spokesman Lee Dong-wan made it clear Wednesday that Byun lives in a 1,000-square-foot apartment in central Seoul, and the value of her savings and her apartment give her a net worth of just over $1 million.

“She has led a very humble life,” he declared.

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bruce.wallace@latimes.com