Lee Jae-myung: "Excess Profit Recovery Clause Never Existed, So It Cannot Be 'Deleted'"

[Suwon Ilbo=Reporter Park No-hun] Gyeonggi Province Governor Lee Jae-myung has continued to provide detailed explanations regarding the excess profit recovery controversy related to the "Daejanggong incident."

Governor Lee Jae-myung recently requested corrections through his personal SNS, stating False: "Excess Profit Recovery Clause Deleted," and Truth: "Excess Profit Recovery Additional Opinion Not Adopted," demanding corrections from media outlets that reported otherwise.

The following is the full text of Governor Lee Jae-myung's SNS post.

<Fact Check...Media Reporting Correction Request>
False: "Excess Profit Recovery Clause Deleted"
Truth: "Excess Profit Recovery Additional Opinion Not Adopted"
1. This was not an issue at the time in 2015; it is a new fact revealed through media reporting this time.
2. The excess profit recovery clause did not exist from the beginning, so it cannot be "deleted."
3. Reasons for non-adoption of "Excess Profit Additional Recovery Opinion"
. In order to prevent private cost inflation, accounting fraud, and lobbying, a policy of "predetermined Seongnam City share" was established
In accordance with the "predetermined Seongnam City share" policy, a public bidding process proceeded. While conducting detailed negotiations with Hana Bank Consortium, selected from three bidding companies, there was an operational opinion to "additionally recover excess portions of anticipated profits if real estate market conditions improve," but this was not adopted in the approval process by the corporation.
4. This opinion is unacceptable for the following reasons
1) The request for additional burden contradicts the bidding contents
2) While avoiding "loss sharing if market conditions worsen," the claim to "share additional profits if market conditions improve" cannot be enforced.
(The counterparty will naturally also demand shared loss risk)
3) Bearing losses if market conditions worsen contradicts the "secured profit assurance" policy.
4) If refusing excess profit sharing, contract rejection could lead to litigation
(High possibility of project delays and loss of suit)
4. Profit Distribution Details
1) 2015: Worst real estate market conditions, surplus inventory (anticipated profits of 623 billion won)
Seongnam City: 440 billion won (70%) fixed, no changes possible
Private sector: 180 billion won (30%) anticipated profits, variable according to market conditions
2) 2017: 110 billion won additional recovery (imposed as approval condition)
3) 2021: Private sector's anticipated profit portion increased to 400 billion won due to sharp land price increases
With 10% land price decline, profit decreases by 184 billion won, converting to loss
(Investment capital of 1.5 trillion won)
5. To the members of the press, please report based on facts that this is "Excess Profit Recovery Additional Opinion Not Adopted" rather than "Excess Profit Recovery Clause Deleted," and please correct your existing reports accordingly.