[비즈한국] Allegations have been raised that Noh Hyeong-ouk, the nominee for Minister of Land, Infrastructure and Transport, engaged in 'gap investment' with an apartment in Sejong City that he was allocated through a special supply program for relocated agencies. The claim suggests that he generated a market profit of 200 million won over four years by renting out the property via a "jeonse" (lump-sum deposit) lease instead of living in it himself. BizHankook examined the entire process from the nominee's initial allocation of the home to its eventual sale.
Special Supply Apartment in Sejong City: 200 Million Won Profit Without Residency
According to the official gazette and real estate registry, Nominee Noh Hyeong-ouk was allocated an apartment in Eojin-dong, Sejong City, with a dedicated area of 84.73㎡ (25.63 pyeong) in November 2011, while he was serving as the Director General for Public Innovation at the Ministry of Strategy and Finance. This was part of the special supply quota allocated to public officials whose agencies were relocating to Sejong City. Nominee Noh took ownership in October 2013, when the apartment was completed.
The purchase price of the apartment was 283.14 million won. Given that Woori Bank placed a mortgage on the property with a maximum bond amount of 225.5 million won, it appears he took out a mortgage loan of 205 million won. The mortgage setting ratio for Woori Bank home loans is 110%. This mortgage was cleared one month later, in November 2013.
Nominee Noh Hyeong-ouk did not actually live in the Sejong City apartment. It is reported that he resided in an apartment he owned in Banpo-dong, Seocho-gu, Seoul, until August 2016 while working at the Ministry of Strategy and Finance, and thereafter commuted from a government-provided residence in Sejong City during his time as the Second Vice Minister of the Office for Government Policy Coordination. A Ministry of Land, Infrastructure and Transport official stated, "(Nominee Noh's) family attended school in Seoul, and he himself could not live in the Sejong City apartment due to budget or National Assembly-related duties."
Instead, Nominee Noh rented out the Sejong City apartment to an individual and the National Pension Service (NPS), respectively. In November 2015, the NPS established a jeonse right on the property with a 200 million won deposit for a two-year term. A year prior, in 2014, Nominee Noh reported a 200 million won rental liability for the Sejong City apartment; judging by the timing of the mortgage cancellation, it is estimated that he found his first tenant in November 2013, used the jeonse deposit to repay his loan, and then reported the liability.
Nominee Noh Hyeong-ouk sold the Sejong City apartment for 500 million won in September 2017. This was about two months before the NPS lease term was set to expire. In doing so, Nominee Noh gained a market profit of 216.86 million won in about four years without ever having lived in the apartment.
Nominee Noh currently owns one home in Banpo-dong, Seocho-gu, Seoul. This is a 'stand-alone' apartment complex built in October 2003, consisting of one building with 9 units (1 basement level to 5 floors above ground). In December 2004, Nominee Noh purchased a unit with a dedicated area of 121.79㎡ (36.84 pyeong) from an individual. The government-assessed value for this specific unit size is 681 million won.
Why Did the Fiscal Management Officer, Who Oversaw Fund Evaluation, Take the NPS as a Tenant?
Meanwhile, the National Pension Service, which was Nominee Noh Hyeong-ouk's tenant, was related to the nominee's professional duties at the time. In November 2015, when the jeonse contract was signed with the NPS, Nominee Noh was serving as a Grade 1 high-ranking official at the Ministry of Strategy and Finance, acting as the Fiscal Management Officer. This position involves overseeing the Treasury Bureau, Fiscal Innovation Bureau, Fiscal Management Bureau, and Public Policy Bureau, while assisting the Minister and Vice Ministers. Among these, the Fiscal Management Bureau is responsible for evaluating whether the National Pension Service and others are managing their funds efficiently.
The National Pension Service stated, "The Corporation rents housing for use as accommodations for employees working in non-hometown areas. When looking for accommodation listings, we find them through real estate agencies, and we are generally unaware of the landlord's profession or status unless they disclose it, nor is it a consideration during contract negotiations."
The aforementioned Ministry of Land, Infrastructure and Transport official added, "Nominee Noh Hyeong-ouk found both tenants through real estate agents and entered into the contracts from the perspective of a landlord. It is difficult to conclude that there is a conflict of interest simply based on who the tenant is."
When asked about the property review details and results from that time, the Property Review Division of the Ministry of Personnel Management, which is responsible for reviewing the assets of high-ranking public officials, said, "The Government Public Service Ethics Committee imposes fines, disciplinary actions, or warnings on high-ranking officials who violate review standards, but we cannot disclose individual review details or results as they are classified information."