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Mapo-gu District Head Park Kang-soo Loses Lawsuit Challenging Blind Trust Decision on Family-Owned Media Stocks

[비즈한국] It has been confirmed that Park Kang-soo, the Mayor of Mapo-gu, Seoul, lost a lawsuit he filed to overturn a decision by the Ministry of Personnel Management, which ruled that the media company stocks held by him and his family have a conflict of interest with his official duties. The mayor has transferred his personal shares to his children and is currently in the process of appealing the ruling. With recent attention on the blind trust system after former Guro-gu Mayor Moon Heon-il resigned from his post rather than sell shares in a company where he was the largest shareholder, there are growing calls to strengthen the responsibilities of public officials.

On July 3, 2023, the Ministry of Personnel Management's Stock Blind Trust Review Committee determined that the media company stocks held by Park Kang-soo, his spouse, and his children (eldest son and eldest daughter) were related to his duties, and notified the mayor to sell or place the shares in a blind trust. Disagreeing with the committee's decision, Park filed a lawsuit in January of this year to cancel the ruling on the relevance of his duties, but he lost in the first trial on August 22.

Mayor Park, believing that there is room for a different outcome in the second trial now that he has disposed of his personal shares, filed an appeal with the Seoul High Court on September 6. Park's side stated, "Once the results of the second trial are out, we will handle the shares according to proper procedures." Their stance is to consider disposal options such as a blind trust depending on the court's judgment.

The blind trust system is a policy requiring public officials subject to asset disclosure to sell or place shares in a blind trust within two months if the total value of stocks held by them or their related parties (spouse, lineal ascendants and descendants) exceeds 30 million won. Under the Public Service Ethics Act, married daughters, maternal grandparents, maternal great-grandparents, maternal grandchildren, and maternal great-grandchildren are excluded from the category of related parties.

According to asset disclosure data released by the Government Public Service Ethics Committee, at the time of his election, Mayor Park and his family held 60,000 shares of "Thank You Media Group" and 20,000 shares of "Ilgan Sisa Shinmun." Thank You Media Group is the publisher of the news outlet "Thank You News," while Ilgan Sisa Shinmun publishes "Sisa Focus." Mayor Park is the founder of Sisa Focus and has served as its chairman, CEO, and publisher. Thank You News, a sister publication of Sisa Focus, was launched in 2015 as a local media outlet for Mapo under the name "Mapo Thank You News."

Mayor Park was elected as the Mapo-gu District Head as a People Power Party candidate in the 8th Nationwide Simultaneous Local Elections in June 2022 and took office on July 1. Following the committee's decision regarding his media stocks the following year, he transferred 20,000 shares of Thank You Media Group that he personally held to his eldest son and eldest daughter (10,000 shares each) in August. In November, he relocated the media company's headquarters from Mapo-gu to Seodaemun-gu. Currently, Mayor Park himself holds no shares.

Based on asset disclosure records from March 28 of this year, the value of the shares in the two unlisted media companies held by Park's family amounts to 3.4 billion won. Of the Ilgan Sisa Shinmun shares, Park's spouse holds 12,000, and his son and daughter hold 4,000 each. For Thank You Media Group, the son and daughter each hold 30,000 shares.

The Stock Blind Trust Review Committee concluded that the media companies, which are 100% owned by Park's family, were linked to his duties involving the establishment and implementation of promotion plans, public relations for the district, and management of media outlets. The committee also considered the fact that the media headquarters was located in Mapo-gu at the time, which meant the district office's Economic Promotion Department handled business registration matters such as closures.

In the administrative lawsuit, Mayor Park countered the finding of duty-relevance by arguing, "The media companies are unlisted, and the shares are simply for securing management rights; their value does not increase due to my duties as district head." He added, "Given that under the Act on Prevention of Conflict of Interest, these companies cannot sign private contracts with Mapo-gu, that the headquarters has been moved, and that the company's media activities are unrelated to the work of a local government head, there is no relevance to my duties."

The court sided with the review committee. In the first trial, the Seoul Administrative Court (presiding judge Lee Ju-young) dismissed Park's claim, ruling, "It is reasonable to view the position of Mapo-gu District Head as having the capacity to obtain significant information about or influence the management or property rights of the companies in question; therefore, the relevance between the company shares and his duties can be acknowledged."

The court cited the following as reasons for dismissal: the fact that the media companies continued to operate in Mapo-gu until the committee's decision; the sufficient possibility that Mayor Park could access information related to the company shares while performing his duties; the fact that it is effectively a family-owned company where Park can exert management influence; the fact that even unlisted stocks have property value; and that moving the company headquarters does not limit their business activities to the location of the headquarters.

The court also recommended the disposal for the sake of fair duty performance. The court stated, "Selling the shares or placing them in a blind trust could fundamentally block the possibility of a conflict of interest. This would protect trust in the fair performance of the district head's duties and prevent the compromise of the fiduciary relationship between Mapo-gu residents and the district head. This is fully in line with the purpose of the blind trust system." The court added, "It would allow him to be free from unnecessary misunderstanding or suspicion from the public, including local residents, and enable him to focus on his duties."

This is not the first time a district head has challenged the findings of a stock blind trust review committee. Recently, former Guro-gu Mayor Moon Heon-il voluntarily resigned from his post on October 16 after a ruling that his 17 billion won stake in "Moon Engineering" was related to his official duties. Moon had filed two administrative lawsuits but lost both, and despite appealing to the Supreme Court, ultimately chose to resign. A by-election to choose a new Guro-gu District Head will be held on April 2, 2025.

Moon's actions drew criticism from the local community and the political sphere. Residents even protested at his retirement ceremony. On October 17, at a Supreme Council meeting, People Power Party leader Han Dong-hoon remarked regarding Moon, a member of his own party, "There should be no one in the People Power Party who treats public office as a side job," adding, "I will ensure that such people are never nominated."