SME minister nominee under siege
Opposition parties demand withdrawal of Hong Jong-haak
Hong Jong-haak, President Moon Jae-in’s choice for SMEs and startups minister, is facing mounting pressure to withdraw from the nomination over some of his family members’ dubious financial transactions.
His parliamentary confirmation hearing is set for Nov. 10. But opposition parties are demanding his withdrawal immediately, claiming that Hong, a former lawmaker and a professor of economics, is unqualified to be part of President Moon Jae-in’s economic reform drive.
The controversy is further stirring up a call for the overhaul of Cheong Wa Dae’s personnel screening system, as Hong’s nomination came after the previous choice, Park Seong-jin, withdrew in September after failing to win parliamentary endorsement.
The delay in Hong’s appointment also hampers the Moon administration’s efforts to fill all 18 cabinet posts with his own nominees after Moon took office in May. The dispute about Hong centers on his 13-year-old daughter and wife each receiving a 25 percent stake in a building belonging to his mother-in-law as a gift in 2015.
The move was seen as a bid to save money and pay less in gift taxes, which would increase if Hong’s wife singlehandedly received a 50 percent stake in the building estimated to be worth 3.4 billion won ($3 million).
The value of wealth held by Hong and his family increased to 5.58 billion won this year, up from 2.17 billion won in 2012.
Such wealth management is illegal. But the opposition parties accused Hong of being hypocritical, pointing out that he was a vocal critic of wealth being passed on from one generation to the next when he served in the 19th National Assembly from 2012 to 2016.
He had also claimed that inheritance and gift taxes should be raised when the amount involved exceeds 3 billion won.
As Moon’s campaign strategist for the May 9 presidential election, Hong called for larger inheritance and gift taxes as well when assets are passed down skipping a generation in a family, especially among conglomerates.
Hypocrite?
Against this backdrop, Hong’s eligibility as the minister was called into question again as his daughter was found to be receiving a loan of about 220 million won from her mother to cover the gift taxes.
The loan is said to have been extended to Hong’s daughter with interest. Despite Hong’s explanation, the opposition parties raised suspicions whether the teenager had been paying the interest on her own.
“I’d say Hong’s words and behavior are the height of hypocrisy,” said People’s Party floor leader Rep. Kim Dong-cheol.
“Not only does he fail to defend the spirit of noblesse oblige but he is also behaving shamelessly as a two-faced person.”
Rep. Choi Yeon-hye of the largest opposition Liberty Korea Party (LKP) asked Hong to step down immediately, saying “He reckons his family’s transfer of wealth is righteous while accusing other families as being evil.”
The third largest opposition Bareun Party floor leader Rep. Joo Ho-young said Hong is “Moon’s headache,” adding “The pain will only grow as time goes on.”
The opposition lawmaker raised questions as well over Hong’s eligibility to lead the newly-established SMEs and startups ministry because of comments he wrote in a book.
In his book published in 1998, he cited a need for entrepreneurs to enter top universities, whereas many SMEs and startup owners did not attend those schools.
“I wonder how many business people at SMEs and startups went to prestigious schools.,” said Rep. Jeong Woon-chun of the Bareun Party.