EXCLUSIVE: Key investor in Saenuri politician’s Jeju airport project used fake bank documents

The following exclusive exposing fraud connected to an investor in a major development project on Jeju Island is published in Korean in the latest SisaIn Magazine. The following is the English version of the story, unpublished elsewhere. It is not a direct translation of the Korean-language report, and contains additional details and background, but maintains the key elements of the story. — John

사본 - 20140629_161804By John Power and Eunsun Heo of SisaIn Magazine

A key foreign investor in a former Saenuri Party gubernatorial candidate’s project to build a new airport and other infrastructure on Jeju Island has used forged bank documents to claim having billions of dollars at his disposal, according to a months-long investigation.

Leonard Dillon-Kaijuka, one of two principal investors in the project spearheaded by ruling party politician Kim Gyeong-taek, has circulated multiple documents purporting to show bank deposits in his name ranging in amount from 1 billion to 5 billion euros. The “proof of funds” documents, which first appeared on an obscure whistleblower website based abroad, feature the apparent letterhead of Dutch bank ABN Amro Bank and appear to contain the signatures of bank officials. The documents are dated between 2009 and last year.

Dillon-Kaijuka, the president and CEO of Dillon-Kaijuka Associates, confirmed his ownership of the documents when confronted for this story, but claimed they are genuine.

He said the documents had been “hacked” by malicious former employees as part of a “defamation campaign” against him. He also said they had not been used in his business activities in South Korea.

“The documents are private financial banking documents, legal financial banking documents,” he said. “And (it is) very destructive when they are leaked in the public like they have been. Those are private documents. Banks know what they are – bank communications. Those documents enable banks to communicate with each other, privately.”

He further claimed the issuing bank was very “displeased” over the disclosure.

But a press official at ABN Amro Bank earlier told this writer that the documents are forgeries and the bank has no dealings with Dillon-Kaijuka.

“The ABN AMRO documents showed on the website are false and forged documents. Who makes those documents or who is using these documents is unkown (sic) to me,” Jeroen van Maarschalkerweerd, senior press officer at the bank, said via email.

When contacted for a response, Dillon-Kaijuka claimed the bank was protecting his privacy in disavowing the authenticity of the documents.

He further claimed to be a victim of media harassment and a campaign to destroy his business, both of which, he said, have racist motivations. Dillon-Kaijuka is an African-American.

The massive development project on Jeju, which calls for the construction of a new airport, “world trade center” and cultural center, was first reported in Jeju’s local media in February. At the time, Kim, currently the head of the government transition preparation committee for Jeju governor-elect Won Hee-ryong, was vying to be the Saenuri Party nominee for governor in the June 4 elections. Kim, a former vice governor of Jeju, failed to secure the nomination, but fellow Saenuri Party candidate Won went on to win the election.

The conservative politician, who is pursuing the project through his think tank Jeju Future Society Research Institute, signed a memorandum of understanding for the project with Dillon-Kaijuka Assoc. and another firm, GK Holding Group, on February 22, according to local news reports. The MOU stated the two firms were to provide $5 billion for the project, according to the reports.

The reports contained little information on the exact nature, terms and time scale of the development, which still remain largely unclear.

In April, Kim told local media he expected the transfer of the first $50 million in capital to a commercial bank by the end of the month and for a special purpose company to be established for the project in May.

When contacted for clarification last week, Kim told SisaIN the plan is still going ahead but has been delayed.

“We failed to get money by the end of April, therefore we changed our plan. We are going to wait for the money until the end of this month (June),” he said.

In late May, Dillon-Kaijuka told this writer that the official process of seeking approval for the project would begin after a base of operations is established in June.

“We understand that the first process requires that we have a presence there, and with that presence we have a significant cash deposit there, we understand that. And once that happens we begin to take those next steps (for government approval).”

He claimed to have discussed the project with both the U.S. and Korean governments but declined to provide further details. He further claimed not to know the value of the MOU, adding that he has “no idea” where the figure reported in local media came from.

A spokesman for Won, meanwhile, denied the Jeju governor-elect had any knowledge of the project whatsoever, adding that a decision has yet to be made on the construction of a new airport. He said Won has no personal relationship with Kim, and had appointed him to lead his preparation committee as a result of their election rivalry.

“Accordingly, successful candidate Won certainly could not have known about any past issue with Kim,” a statement from his office read.

The documents in question first appeared on a seemingly little-known website called The Whisteblowers. The website, which contains thousands of apparently leaked documents including financial documents and passports, claims to expose irregularities in finance across the world. Its two apparent operators, David Rea and Sanjay Kalpoe, claim to be former independent financial brokers from the U.S. and the Netherlands, respectively. Both individuals are listed as founding partners on the website of an apparent investment and asset management firm called Hammer Wealth Solutions.

Rea said the documents linked to Dillon-Kaijuka were provided by a confidential source in South Korea. This writer was unable to independently make contact with this individual.

Dillon-Kaijuka’s history in business is unclear. He refused to disclose his previous projects or source of his funds, saying only that he has an extensive network of investors.

The American national, who has been operating out of an office in Gangnam in recent weeks, said that he is in Korea to forge business ties with Africa.

“What we’ve promoted is a relationship between Jeju and the island of Zanzibar, which has a similar status as Jeju has here for Korea. And helping facilitate entry of Korean infrastructure and technology delivery to Africa — facilitate the relationship between Jeju and Zanzibar,” he said.

Dillon-Kaijuka Assoc., described on its website as a provider of “investment and development services,” is registered with the state of Illinois as a corporation, but not with the state or federal financial regulatory authorities. Entities that wish to sell stocks to the public generally must be registered with the U.S. Securities Exchange Commission or equivalent state authority, but corporations are not generally required to disclose even the nature of their business. Kaijuka said that his company does not trade in securities.

Along with Dillon-Kaijuka as president, an Alvertis Bell is listed as director of the corporation in state records in Illinois.

Alvertis Bell, aka Al Bell, is the name of one of the most famous figures in Motown, having co-owned Stax Records in the late 60s and early 70s. Bell did not return correspondence seeking to confirm whether he is the same person. Dillon-Kaijuka and Bell are also listed on official records for the incorporation of a company in Arkansas, the famous Bell’s home state, called Southern States Service Corp. in 1979.

Meanwhile, Dillon-Kaijuka Assoc.’s head office, located in downtown Chicago, is a space rented from Regus, a multinational company that provides rooms and phone-answering services to businesses. A Regus employee who answered the phone listed on the firm’s website confirmed that the company has no physical presence at the address. Kaijuka’s home address, as listed on his firm’s incorporation record, has an estimated off-market value of just over $50,000, according to Homes.com.

Song Young-ho, introduced by Kim as the effective manager of the project, said he was aware of allegations against Dillon-Kaijuka but does not believe them to be substantiated.

“We have heard about that rumor that Leonard Dillon-Kaijuka is not a reliable person and we tried to investigate if the rumor is true or not,” said Song. “And we asked him directly. Leonard answered that it was just a kind of slander. And we found that he was not accused of anything at all. We thought, if there was something wrong with him, there would be a record that he was accused or something. But he was not.”

A new airport on Jeju has been a recurring issue at election time, with the current airport predicted to reach full capacity within about a decade, according to a report in Jeju Weekly from 2010.

Both President Park Geun-hye and former President Lee Myung-bak pledged a new airport for the island during their election campaigns.

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[The Korea Herald] Can Korea break the two-party mold?

Numerous smaller political parties have come and gone in Korea, which in recent years has tended toward what is essentially a two-party system. Ahead of the 2012 National Assembly elections, a number of minor players, including the then new Korea Vision Party, hoped to make their mark on the political landscape. The results of the election, however, mostly reinforced the status quo, with the conservative Saenuri Party retaining its majority, and the liberal Democratic Party taking most of the remaining seats. The remaining handful went to the left-wing Unified Progressive Party and Progressive Justice Party and a small number of independents.  — John.

By John Power

Korea, like so many democracies, broadly fits the definition of a two-party system made up of liberal and conservative camps.

Yet its two-party mold remains young and fragile compared to countries such as the U.S., where power has passed between the same two parties without interruption for more than 150 years. Korean parties rarely last more than a few years before a name change, merger or outright dissolution, while the National Assembly typically accommodates a number of small parties aside from the big two.

In the country’s first free presidential election in 1987, not two, but three major parties vied for Korean politics’ top job. The conservative Democratic Justice Party’s Roh Tae-woo clinched victory, benefiting from a spilt in the liberal vote between the Reunification Democratic Party’s Kim Young-sam and Party for Peace and Democracy’s Kim Dae-jung. Kim Jong-pil, the founder of the Korean Central Intelligence Agency, the precursor to the National Intelligence Service, came a distant fourth on the conservative opposition New Democratic Republican Party ticket. For the next election in 1992, Kim Young-sam merged his party with Roh’s ruling bloc, creating a clearer two-party spilt and ultimately winning Kim the Blue House. Parliamentary elections, since 2000 in particular, have tended toward reinforcing the presence of two major parties and a number of bit players.

Park Se-il speaks at a press conference for the recently formed Korea Vision Party last month. Park’s party hopes to shake up the two-party status quo. (Yonhap News)

“The first reason is the political parties are largely based on regionalism, Jeolla regionalism and Honam regionalism,” Kyung Hee University politics professor Yun Seong-yi told Voice.

“So unless the regionalism breaks down, there is not much chance to have a multi-party system in Korea. We also have a sharp competition or clash between the liberals and the conservatives nowadays. People want to have two distinctive ideological parties.”

The election system, which sees 246 out of 299 seats chosen in single seat constituencies favoring bigger parties, is also a factor.

“Generally speaking, single-member constituencies tend to bring about two-party systems,” noted Hong Deuk-pyo, a political science professor at Incheon’s Inha University.

The upcoming April 11 general election, as a clash between the recently renamed Saenuri Party and Democratic United Party, would appear to continue the two-party mold. What could be a game-changer, however, is the pre-election alliance of the DUP with the minor Unified Progressive Party. With the two big parties expected to take 130-145 seats each, the far-left UPP could become kingmaker in the next Assembly, even if it only wins the roughly15 seats predicted by opinion polls.

“After the election the UPP and DUP will cooperate to pass laws, but case by case,” said Hong. “It is obvious that the UPP and DUP are going to keep their pace by checking the Saenuri Party in the National Assembly along with searching for ways for cooperation to win the upcoming presidential election.”

Another challenger to the two-party status quo is the recently formed center-right Korea Vision Party, headed by former Saenuri Party member and Hansun Foundation chief Park Se-il.

“We were established in order to break that chain (of power moving between two major parties),” said Park’s deputy chief of staff Lee Sang-baek. “Both parties have been based in certain regions, as you know. For instance, the Saenuri Party is very strong in the Gyeongsang area whereas DUP is very comfortable and strong in Jeolla. But instead of regionalism, KVP hopes to create values that we believe in. Instead of a region, we want to be Korea-based party based on our ideology.”

Lee, whose party is fielding 27 single-seat constituency and eight proportional representation candidates, accepts that is “very difficult to break that barrier” and make an impact as a third party. But he sees the party’s electoral bid as “a good and meaningful experiment.”

Nor is the party concerned about the possibility of splitting the ― in this case conservative ― vote and handing power to the other side, the curse of so many third-party bids in two-party set-ups.

“I don’t think we are splitting the conservative vote,” said Lee. “Basically we are creating a new definition of conservative in this society. That why the KVP is trying to come into play, come in to provide more reasonable and reform-minded conservative policies.”

Yang Seung-ham, a political science professor at Yonsei University in Seoul, said that Koreans’ lack of a unifying ideology leaves the door open to third or fourth parties.

“At present, Korean political positions are diversified according to region, income, age and ideology. The major parties are not enough to embrace the complicated differences. And 40 to 50 percent of Korean voters do not identify themselves with any political party due to political apathy and indifference. Therefore, there is always room for a third or fourth party,” he said.

But much depends on the presence of a major figure to rally around, said Yang. Korean politics has long been personality-driven: Park Geun-hye maintains considerable allure and influence despite her reputation for reticence on policy issues, while former presidents Kim Dae-jung and Roh Moo-hyun each founded the parties that carried them to power and continue to be revered in liberal circles.

“Unlike the 1987 election, a third party may not present their own candidate this time because they don’t have a prominent figure to compete with the two major party candidates,” said Yang. “Only in the case that professor Ahn Cheol-soo runs for the presidency, then there will be more than two major figures. Or a person with the support of professor Ahn might become a third major figure in the upcoming presidential election.”

Yun attributes the penchant of Korea’s “2.5-party system” for personality politics in part to the tendency of parties to distinguish themselves by region rather than ideology, making it “much easier to base (them) on their political leaders and personalities.”

This, argues Hong, restricts voter choice, raising the need for a third, “moderate” party to act as a broker between the two “polarized” major parties.

As Gregory Henderson mentioned, politics of vortex have been one of the distinct characteristics of Korean politics since 1948,” said Hong. “Political parties have served as political machines for the prominent political elites in their striving for the presidential job. … Grouping around powerful figures is one of the negative factors that restricts voters’ options, but their choice affects party alignment.”

The emergence of a full-blown multi-party system, while increasing voter choice, would make coalition governments more of a norm, potentially increasing political instability. Their perceived instability has made the Korean public wary of such arrangements, according to Yang.

“Political coalitions are unstable in nature. It is particularly so in Korea, because dialogue, discussion, persuasion, negotiation, cooperation and tolerance are the concepts to be more developed in Korean politics. A coalition is more like a marriage of convenience for political purposes,” he said.

This makes the entrenchment, rather than weakening, of the two-party system more likely in the future.

“I think Korea will move toward the two-party system in the future as Korean democracy matures gradually,” said Yang. “At the moment the Korean political parties are not based on policy orientation but are catch-all parties. The political parties are the verge of the democratization process.”

By John Power (john.power@heraldcorp.com)