Former first lady Kim Keon-hee's long-running luxury-goods controversy has taken a new turn after she was indicted over alleged irregularities surrounding a $2.9 million presidential-residence project. This was followed a day later by indictments of two audit officials accused of distorting evidence in the same relocation scandal.
On August 18, a special counsel charged Kim and People Power Party lawmaker Yoon Han-hong over the 4.12 billion-won ($2.92 million, £2.25 million) project, alleging they helped steer the work to 21 Gram, a construction company investigators say lacked the necessary qualifications.
Prosecutors also allege that Kim received 10.12 million won in bribes and valuables from 21 Gram in exchange for help securing the contract and favourable treatment over construction costs. The allegations bring Kim's controversial luxury gifts directly into a fresh criminal case.
The Dior Gifts at the Centre of the Case
According to the special counsel, 21 Gram provided Kim with Dior clothing, a belt and a bracelet worth 6.88 million won in May 2022, and later paid 3.24 million won for Chanel products. The alleged benefits total 10.12 million won and were connected to efforts to secure the residence work and favourable treatment over its costs.
Kim therefore faces allegations that go beyond the earlier public controversy over receiving a luxury Dior item. Investigators have incorporated the alleged gifts into a wider case concerning the award and handling of the presidential-residence project. Kim has not been convicted, and the allegations will be tested through the judicial process.
How the $2.9m Residence Deal Became a Scandal
The residence project was carried out during the Yoon Suk Yeol administration. Investigators allege that the planned residence site was changed and that 21 Gram replaced another contractor following demands from Kim and instructions from Yoon Han-hong, who had led the presidential transition committee's relocation task force.
The special counsel further alleges that 21 Gram lacked a general construction licence but nevertheless obtained the work. Investigators are examining whether another company's name was allegedly used in the contracting process to circumvent licensing requirements.
That made the residence project more than a dispute over luxury gifts. It became an alleged influence-and-contracting case involving a multimillion-dollar public project.
Audit Officials Indicted Over Alleged Evidence Manipulation
On 19 August, the scandal widened again. The special counsel indicted two current and former Board of Audit and Inspection officials over alleged efforts to distort the audit of the presidential office and residence relocation.
One faces charges including abuse of authority and obstruction of official duties by deception. The other faces additional allegations including drafting and using false official documents.
Investigators allege that the officials altered statements in questionnaires and confirmation documents involving 21 Gram, coordinated testimony from audit subjects and interfered with the appointment of a lead audit commissioner. The special counsel also alleges they sought to maintain existing audit conclusions after a decision to suspend the audit results in May 2024.
The audit had already faced criticism over its handling of the residence controversy. Critics accused the Board of Audit and Inspection of producing a whitewashed investigation after its September 2024 report did not provide detailed information on how contractors were selected.
The new indictments take that criticism further. The special counsel now alleges that officials involved in the audit distorted testimony and documents and sought to preserve its existing conclusions.
What Connects the Gifts, the Contract and the Audit
The latest indictments connect three distinct strands of the residence controversy. These are the alleged luxury gifts to Kim, the alleged preferential treatment in a $2.9 million public project, and allegations that officials later manipulated the audit examining the affair.
They do not, however, establish a single proven conspiracy linking every element. The Dior allegations concern the alleged benefits received by Kim, while the audit case concerns the conduct of officials investigating the residence relocation.
What has changed is the scale of the legal scrutiny. Within two days, the controversy moved from allegations about how a major presidential project was awarded to allegations about whether the official audit of that project was itself compromised. The courts will now determine whether the allegations against Kim, the other defendants and the audit officials can be substantiated.
