A new interagency task force on Thursday launched a high-profile investigation looking into allegations that employees of the state-run Land & Housing Corp. used confidential information to make speculative land purchases in residential development zones.

The Moon Jae-in administration’s stern response was seen as a move to minimize the negative impact on its real estate policies and also an attempt to dial down escalating political debates that have dragged in incumbent Land Minister Byeon Chang-heum under the spotlight.

“In the wake of the LH employees’ speculative land buying allegation, we shall set to investigate all public servants and public institution employees,” said Prime Minister Chung Sye-kyun in a press briefing.

“We do not, however, suspect that Minister Byeon was involved in this given case (during his years as LH chief).”

He also added that members of the National Assembly and the Blue House will not be subject to the investigation.

Chung is to lead the interagency team that will carry out the probe on officials at the land ministry and other relevant public agencies might have been involved in the latest LH land trading scandal.

The investigation was initially launched to look into a group of officials at LH over allegations that they used confidential information to purchase farmland in Gwangmyeong and Siheung, before the government announced a major development plan there.

The two cities in Gyeonggi Province are expected to accommodate some 70,000 new homes, as part of the government’s plan to ramp up housing supply and cool down the heated real estate market in greater Seoul.

A total of 14 LH employees and their family members are accused of purchasing 23,028 square meters of farmland for some 10 billion won ($8.89 million) between April 2018 and June 2020, having taken out loans worth 5.8 billion won from financial institutions. Two of them are former employees while the rest have been suspended from their duties in the wake of the allegations.

The expanded scope of the investigation reflected the growing suspicion that the massive speculative scheme might have involved more than just LH staffers.

“President Moon Jae-in has ordered (the government) to figure out whether the new town speculation scandal was the deviation of some employees or whether it was due to deep-rooted corruption,” said Cheong Wa Dae spokesperson Kang Min-seok.

The president’s remark added to his order just a day before that a thorough investigation be carried out into the corresponding dispute.

A dilemma for the Moon government is that incumbent Land Minister Byeon Chang-heum had served as LH chief from April 2019 to December 2020 -- when the disputed land buying purportedly occurred.

While the ruling Democratic Party focused on the investigation on the development plan itself, several members of the main opposition People Power Party has held the real estate policymaker responsible and consequently blamed the Moon administration for naming him to the current position.

Meanwhile, LH took a low posture and issued an official apology, vowing to take all investigative and punitive measures possible.

“We offer our sincere apology over the allegations that some of our employees were involved in the Gwangmyeong-Siheung district speculation,” said LH Executive Vice President and Acting President Chang Choong-mo in a statement.

“As a public corporation, our role was to give hope to the people amid a turbulent real estate market, but some employees have failed to fulfill their duties as public servants.”

In an extended gesture to recover public trust, LH also vowed to introduce a declaration system on the land transactions of all employees and their families, especially for those involved in new real estate development projects.

By Bae Hyun-jung (tellme@heraldcorp.com)