Defense minister nominee Kang Shin-chul accused of housing allocation fraud

Defense Minister nominee Kang Shin-chul is facing allegations that he and his family fraudulently registered as residents of a soon-to-be-demolished Seoul neighborhood to claim priority housing benefits reserved for displaced residents, an accusation the minor opposition Reform Party has called grounds for his withdrawal on Thursday. 

The Reform Party alleged at the National Assembly in Yeongdeungpo District, western Seoul, that Kang, his father, his older brother and his aunt systematically obtained displaced-resident status to acquire high-value real estate. “A system created to help residents who lost their homes has been turned into a wealth-building tool for the nominee's family,” said Chun Ha-ram, the party's acting leader. 

According to Chun, Kang registered his address at an empty house in Cheonwang-dong, Guro District, western Seoul, on March 21, 2008, while serving as a battalion commander at a military unit in Hwacheon, Gangwon. His father, who had been living in Seogwipo on Jeju Island, registered at the same address that same day. Three days later, the father moved his registration to the house next door, splitting the household — a move that qualified both men as owners of homes slated for demolition.

Twenty days after Kang's registration, the Guro District Office announced its implementation plan for a project to build a replacement detention facility in the area, along with a compensation plan for displaced residents. Kang and his father subsequently qualified as displaced residents and applied that year for the special housing supply reserved for them. Under a rule giving displaced residents 100 percent priority allocation, both acquired newly built apartments in Seocho District, southern Seoul, in 2012.

Kang's brother and aunt were also found to have used the same special allocation. His brother, who registered at the Cheonwang-dong house the same way Kang did, applied for a special allocation in the Cheonwang District 2 zone in April 2009 and acquired a new apartment in Guro District's Cheonwang Yeonjitown Complex 1 in August 2013. His aunt, who registered at a different house in the same neighborhood, applied for a special allocation of displaced residents in the Umyeon District 2 zone in October 2008.

Chun characterized the moves as a planned, coordinated case of fraudulent address registration aimed at gaming the displaced-resident allocation system, calling it suspicious that Kang — then living in military housing in Hwacheon — changed his registered address shortly before the Cheonwang-dong house was demolished. He also pointed to Kang's father, who transferred his Seogwipo house to another person shortly before applying for the special allocation, then repurchased it for 300,000 won ($223) once the subscription process concluded.

“That was a sham gift meant to manufacture the single-homeowner status required to qualify for the special allocation,” Chun said, adding that Kang, his father and his brother together gained a combined 3.2 billion won in paper profit from the allocations.

A separate controversy has emerged involving Kang's son, born in 1996, who purchased a commercial unit for 700 million won in June in Yangji Village in Seongnam, Gyeonggi — an area slated for redevelopment — after borrowing 715.5 million won from his aunt and uncle. “He bought a commercial property that was all but guaranteed to rise in value, using a 'family connection,' just a year after landing his first job,” said a first-term People Power Party (PPP) lawmaker. “At this point, the whole family looks like a speculation team.”

PPP floor leader Jeong Jeom-sig took aim at the presidential office at the party's Thursday leadership meeting, saying sarcastically, “I have to wonder whether there are bonus points for real estate speculation in this administration's personnel vetting.”

Rep. Lim Jong-deuk, the PPP's secretary on the National Assembly's Defense Committee, said the party would “conduct a thorough, needle-sharp verification at the hearing.”

The PPP requested five witnesses for Kang's confirmation hearing at Thursday's Defense Committee session, including Presidential chief of staff Kang Hoon-sik and officials involved in Seoul's housing subscription process, but the request was blocked by the Democratic Party. Kang's hearing is scheduled for next Wednesday. 

Kang's camp has pushed back on the allegations. “Cheonwang-dong is where my father lived together with family and siblings, in a house he owned,” a representative said. “There was no intent to falsify residency, and nothing illegal took place in the subscription process.”

BY KIM GYU-TAE, RYU HYO-RIM [[email protected]]