Cheon Ha-ram alleges defense minister nominee’s son bought 700 million won shop with an ‘aunt-and-uncle connection’

A 29-year-old son of Defense Minister nominee Kang Shin-chul bought a shop in Seongnam’s Yangji Village apartment complex with 715.5 million won borrowed from his aunt and uncle, according to Cheon Ha-ram, the Reform Party’s acting leader.

Cheon presented what appeared to be loan agreements between Kang’s son and the relatives as evidence of the funding source. The documents reportedly show that 500 million won carried an annual interest rate of 4.6%, while 215.5 million won was lent without interest for 10 years.

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I uncovered the source of the funds used by the nominee’s 29-year-old son to buy the 700 million won shop in Yangji Village.

Cheon said the interest-free loan effectively filled the 217 million won threshold associated with interest-free borrowing. Under current tax rules, the difference between the statutory appropriate interest rate and the interest actually paid can be subject to gift tax. However, no gift tax applies when that annual difference remains below 10 million won. The annual interest on the 215.5 million won interest-free loan would be about 9.913 million won, Cheon said.

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It is suspected to be, in effect, a carefully designed gift within the family.

“Questions have been raised about a suspected carefully designed family gift,” Cheon wrote, arguing that the arrangement appeared to exploit the tax rules. He also questioned why relatives would lend 700 million won to a 29-year-old who had been employed for only about a year, saying young people in their 20s and 30s struggle to obtain bank loans of more than 600 million won even when seeking a newlywed home.

Kang’s confirmation preparation team said the son paid the 70 million won deposit using his own savings and other personal funds. It said the remaining balance, acquisition tax and other necessary expenses came through private loan contracts documented by promissory notes. The son’s real-estate holdings had not been included in the confirmation hearing request submitted to parliament, prompting allegations of concealment.

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What aunt and uncle in this world would readily lend 700 million won to a 29-year-old nephew who has been employed for only one year?