A civic group and a lawyers' association on Tuesday raised allegations that employees at a state housing cooperation bought plots of land in two cities in Gyeonggi Province before the government announced a massive development plan there.

At a press conference, the People's Solidarity for Participatory Democracy and Minbyun, an association of progressive lawyers, accused 14 employees at the Korea Land and Housing Corporation (LH) of speculative land buying in Gwangmyeong and Shiheung.

"They could have violated the ethics codes for public servants," the groups said, adding that they would file a request with the Board of Audit and Inspection to look into the allegations and whether there were more LH officials involved in similarly suspicious transactions.

Last month, the land ministry selected a vast area spanning 12.71 million square meters in the two cities as the site for approximately 70,000 new homes in order to meet housing demand in the capital area and cool down runaway housing prices.

The two satellite cities are located about 12 kilometers southeast of Yeouido, a major business district in southwestern Seoul.

According to the two groups' allegations, the LH employees who are working in the capital area and their family members bought plots of farmland totaling 23,028 square meters for about 10 billion won ($8.88 million) from April 2018 to June 2020, possibly using internal, classified information.

Of the money, around 5.8 billion won is believed to be loans from a particular financial institution, the groups said.

"To buy farmland, you would need to submit a plan for farming, but it is hard to believe that LH employees would have a plan to do farming," the lawyer Kim Nam-geun said. "I suspect they have submitted false documents for land speculation purposes."

They also alleged that those employees worked on the land compensation team and must have knowledge of how to get big compensation when the government seeks to acquire land to build apartments there.

The ministry said it will launch an investigation into the suspicions raised by the groups and refer the case to police if any suspicious activity is detected.

Later in the day, the state-run company said it suspended 12 employees involved in the alleged scheme from duty. Two others are former employees, LH said.

"We have suspended the employees from duty given the gravity of the case ... We have also launched an internal probe," an LH official said.

Prime Minister Chung Sye-kyun ordered the ministry to swiftly investigate the case and take thorough measures. Chung also called on the ministry to check for any similar irregularities in other housing development areas. (Yonhap)