Building Owned By Sun and Moon Group Chairman Sells For 5.9 Billion Won

A building in Gangnam area owned by Moon Byung-wook, the restrained chairman of Sun and Moon Group who had offered illicit political funds to Presidential candidate Roh Moo-hyun’s camp during the 2002 presidential campaign, was sold by a public company at a price higher than the auction price.

The Health Insurance Review Agency (HIRA), an affiliate of the Ministry of Health and Welfare, announced yesterday that it purchased Bona Venture Town (the former BC card building) located in Seocho-dong, Seocho-gu, on May 27 for 39 billion won.

Bona Venture Town, a nine-story building with 5,527 pyong of total area was actually owned by chairman Moon in the name of a person whose surname is known as Choi since last September.

In November of last year, Korea Asset Management Corp. who was a creditor for the building, offered it for 41.4 billion won at an auction. But the result was fruitless and a second round of auction was scheduled with the minimum auction price set at 33.1 billion won.

However, the auction was postponed due to a delay of information announcement, and the HIRA eventually purchased the building for 39 billion won through a general transaction agreement. This price is 6 billion won higher than the second auction’s minimum price.

Meanwhile, Moon will be able to pay back 35.7 billion won of his debt by selling this building to HIRA, but still has to repay 3.3 billion won in his account book.

Regarding the transaction, an official of HIRA said, “The value of building, according to research by the Korea Appraisal Board, is estimated at 40.2 billion won. HIRA therefore purchased it at a price three percent cheaper.” He explained that HIRA chose a “general transaction” because purchasing by auction might raise some conflicts on proprietary rights.

However, real estate experts pointed out that the price of the second auction might have given HIRA a better price. Moreover, the market value of this building is far lower than HIRA’s purchase price, said the experts.

An anonymous source working for an auction consulting company said, “Even if one buys the building at 30 billion won, the annual earning rate including rent charge income will only reach 10.54 percent. In case the purchase price rises above 35 billion won, it would seem hard to gain even five percent.”

Ki-Jeong Ko koh@donga.com