Justice Minister nominee Lee Yong-cheol previously had sentence deferred over ‘illegal wage cuts’; allegations over farmland speculation and the Yellow Umbrella mount

[Financial News] Justice Minister nominee Lee Yong-cheol imposed excessive pay-cut disciplinary action on an employee beyond the limits set by the Labor Standards Act while serving as president of the Seongnam Industry Promotion Agency, and was later given a deferred sentence on a fine in a criminal trial, it has emerged. With various allegations about his personal affairs, including suspected farmland speculation and controversy over his Yellow Umbrella Mutual Aid Fund membership, emerging ahead of his confirmation hearing, his vetting is expected to be a rocky road.

According to legal sources and others on the 10th, the Seongnam Branch of the Suwon District Court issued a ruling in April 2015 deferring a sentence of a 700,000-won fine for Lee over an alleged violation of the Labor Standards Act. A deferred sentence is a disposition in which guilt is acknowledged but the imposition of a sentence is postponed because the matter is deemed minor.
Lee was accused of imposing a one-month pay-cut disciplinary measure in February 2014 because employee A at the agency had inadequately handled the processing of document receipts, reducing the amount paid by approximately 1.23 million won, or 40% of A’s base pay. However, the Labor Standards Act stipulates that deductions from wages as a disciplinary measure may not exceed 10% of the total wages for one pay period (one month), making the measure a clear violation of the legal limit.
Lee, who was initially charged through summary proceedings, requested a formal trial. The court deferred sentencing, saying the charge was established but taking into account that the agency had based its salary regulations on local government officials’ pay rules rather than the Labor Standards Act, and that the regulations had already been enacted before Lee took office.
Lee’s side bowed its head, saying, “We regret that, as CEO, we did not examine more carefully whether the laws were being followed.”

The agency went beyond the pay cut: citing A’s negligence, it dismissed A and also filed a damages suit, claiming that losses of 58 million won, including unpaid maintenance fees from tenant companies, had resulted from A and another employee. The agency lost in both the first and second trials, while A, who had been dismissed, was reinstated following an administrative appeal.
In response, Lee’s side explained, “The employees’ failure to follow the manual caused losses to public finances, and the suit was filed solely to recover them; there was no intention to disadvantage any particular employee.” It added, “He resigned in May 2015 and does not know about the subsequent court proceedings or follow-up measures.”

Lee also moved to actively address the other personal allegations pouring in that day.
Responding to allegations raised by People Power Party lawmaker Joo Jin-woo of “farmland speculation and destruction of evidence (clearing out items) in Gwangju, Gyeonggi-do,” Lee countered, “We are simply carrying out cleanup procedures in accordance with the relevant authorities’ recommendation regarding the extension notification for the farm hut; this is not destruction of evidence.”
On criticism that retaining eligibility for the Yellow Umbrella Mutual Aid Fund, a support program for small business owners, even after taking office as head of the Defense Acquisition Program Administration could have been intended to evade taxes, Lee denied any connection, saying, “I lawfully joined when I was a notary before entering public service, and maintained the business registration while the employment succession process was being completed.” He also drew a line on the fact that his name appeared as counsel for the employer in a past unfair-dismissal case involving a union official, saying, “I was listed formally as part of my law firm’s legal team and did not take part in the actual arguments.”
With major issues piling up, including allegations of involvement in the Daejang-dong project and controversy over his direction to withdraw an indictment, Lee is expected to make his first appearance at the confirmation hearing preparation team’s office on the morning of the 11th and state his position.


[email protected] Park Ji-hyun Reporter