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T O N G I L F O UN D AT IO N 11F Dowon Building
(Foundation for the Support of the Holy Spirit 292-20 Dohwa Dong, Mapo Gu
Association for the Unification of World Seoul, Korea
Christianity) Phone +82-2-3279-6112
Fax +82-2-3279-6010

Press Release
Contact: Ho Yeol Ahn FOR IMMEDIATE RELEASE
Phone: +82-11-725-0728 5 P.M. Korea Standard Time,
December 3, 2010

OUR POSITION REGARDING THE PARC ONE CASE

SEOUL, DECEMBER 3, 2010 – Tongil Foundation released the

following statement regarding the suit that it filed in Seoul

District Court on October 28, 2010, seeking nullification of its

contract with Y22 Project Financing Investment Co. over the

property located on Seoul’s Yeouido.

1. Tongil Foundation’s basic position on this case

The Foundation for the Support of the Holy Spirit Association

for the Unification of World Christianity (hereafter Tongil

Foundation) has no intention to obstruct the national policy

initiative to construct an international financial center on

Yeouido. In addition, with the exception of Y22, we have no

intention to cause harm to any party with an interest in this

project.

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TONGIL FOUNDATION Page 2

It is our intent to correct a situation in which certain

fraudulent actions by Y22 are causing Tongil Foundation to be

deprived of the value of our most important asset and to protect

our property rights.

Through the results of this suit and other means, it is the

intent of the Tongil Foundation to see this project through to

success.

2. How we came to file this suit

i. How the contract on superficies right was concluded

The purpose of Tongil Foundation when we first purchased this

property was to build the world headquarters of the Unification

Church. In reality, because the property lies within the Yeouido

international financial center, we faced a number of

difficulties in pursuing a plan to use the property solely to

construct a religious facility. So it was decided that the

primary facilities on the property would be constructed for the

sake of the international financial center, and then, after the

passage of a certain period of time, a portion would be used as

the world headquarters.

It was with this purpose in mind that in 2005 Chung Hwan Kwak,

the chairman of Tongil Foundation at the time, introduced Y22 as

a property development company employing a number of

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professionals from multiple countries who were members of the

Unification Church.

At that time, the purpose of Tongil Foundation was to receive

stable rental income during the 99-year period in which the

right of superficies was established and to have Y22 transfer

the buildings on the land to the Tongil Foundation at no cost

when this period expired. Once transferred, a part of the
buildings would be used as the Unification Church world

headquarters and the remainder would be used to receive rental

income. Y22 was clearly aware of these plans, and it was on this

basis that the contract establishing the right of superficies

was concluded.

At the time, Y22’s explanation was that all buildings on the

property would be developed on the rental model so that the

buildings could be transferred to Tongil Foundation at no cost

at the expiration of the period of the right of superficies.

There is a clause in the contract that may contradict this, that

is, that Y22 may freely dispose of the superficies right and the

buildings. This clause, however, was placed in the contract only

to ease the financing process. There was absolutely no intent in

reality to permit the disposition of the buildings and other

structures to be constructed on the property.

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ii. Fraudulent actions by Y22

It was the intent of Tongil Foundation to have buildings on the

property transferred by Y22 to Tongil Foundation at no cost at

the expiration of the period of the right of superficies, and

this was Tongil Foundation’s primary purpose in entering into

this contract. For this purpose to be accomplished, Y22 at the

end of the period of the right of superficies would have to

transfer the real estate it owned on the property to Tongil
Foundation at no cost. For this to happen, Y22 must continue in

existence and maintain ownership of the buildings on the

property until the end of the period of the right of

superficies.

Yet when Y22 incorporated on April 28, 2005, it did so as a

project financing investment company with a period of duration

limited to 17 years. It appears to have done this to receive a

tax benefit in accordance with Article 51, paragraph 2 of the

Corporate Tax Act.

So Y22 first established that it would be liquidated prior to

the expiration of the 99-year period of the superficies right,

then defrauded Tongil Foundation by entering into a contract

establishing the right of superficies without informing Tongil

Foundation of its limited duration period. (The contract states

that Y22 will transfer to Tongil Foundation at no cost the

buildings it owns on the property at the end of the period of

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the right of superficies. Yet, it cannot do this because it will

cease to exist in 17 years. So inserting this clause into the

contract was in itself an act of fraud.)

Currently, Y22 is proceeding to arbitrarily dispose of the

buildings to be constructed on the property, together with the

associated superficies rights, and it is becoming difficult for

Tongil Foundation to accomplish the intent that it purposed by
entering into the superficies right contract. If Y22 disposes of

the buildings, Tongil Foundation will be forced to purchase the

buildings at the end of the period of the right of superficies.

As a result of such fraudulent activity, there is concern that

Tongil Foundation’s general rights as the owner of the property

may be infringed. Also, there is concern that a great many

innocent victims may be created through this process. Tongil

Foundation came to the conclusion that we were at an important

turning point where we could resolve the issues that had arisen

with regard to both the process and substantive aspects and that

we could not delay the solutions to these issues any longer. It

was in this manner that we felt compelled to file this suit.

3. Regarding permission from the competent government authority

for establishing the right of superficies

It has come to light that Chung Hwan Kwak, who was chairman of

Tongil Foundation on May 6, 2005, provided for the establishment

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of the right of superficies in an arbitrary manner without a

resolution by the Tongil Foundation board of directors or

permission from the competent government authority.

After the initial contract was concluded, a revised contract was

signed around 2006. This, however, was nothing more than a step

that Tongil Foundation was forced to take because Chung Hwan

Kwak had set the rental rate too low in the original contract
and it was necessary to make even a small improvement on this

point. Also, this step was taken in a situation where we were

not yet aware of the fraudulent activity by Y22 described above.

The establishing the superficies right on the land for a period

as long as 99 years represents a total restriction of Tongil

Foundation’s land rights. It deprives Tongil Foundation of the

ability to dispose of the land, to gain revenue from it, or to

exercise its ownership rights in other ways for an excessively

long period. It view of this, establishing the right of

superficies in this manner certainly requires the permission of

the competent government authority.

The Office of Legislation, the office in the executive branch of

government which has the final say over the interpretation of

laws, takes the position that the establishment of the right of

superficies by a foundation corporation requires the permission

of the competent government authority. (This can be confirmed by

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performing an online search at www.epeople.go.kr.) The Ministry

of Culture, Sports, and Tourism, the competent government

authority in this case, has issued a similar authoritative

interpretation with similar conclusions (see epeople.co.kr for

April 5, 2010).

Some media are reporting that Y22 received an official letter

from the Supreme Court stating that the permission of the
competent government authority was not necessary in this case.

In our understanding, however, the Supreme Court is not an

institution that issues such official letters. Instead, the

Court makes judgments through court proceedings involving

specific cases. We can speculate what happened here was that an

inquiry was submitted to the head of the office within the

Supreme Court that handles land registry issues as to whether a

document showing permission from the competent government

authority must be attached to documents submitted for

registering a right of superficies on a particular property. In

our opinion, the question of what documents must be attached to

a registration application is an issue regarding the

registration process and cannot be used to determine whether the

actual registration is valid in light of various legislation.

4. Our plan for the future

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Tongil Foundation will do our best to see that this project

proceeds in a way that protects the legitimate rights of all

legitimate interested parties.

Meanwhile, even if the situation is corrected through this suit,

Tongil Foundation already has suffered considerable damages. For

example, we have not received any rent payment on the land since

2005. Adding to this the considerable delays in the construction
brings the estimated loss on the project to date to more than

200 billion won. This is one more reason that we could not delay

filing this suit any further.

Separate from the civil suit, we also plan to conduct a legal

review to determine the criminal liability of those who were

responsible for bringing about this situation.

In our judgment, there is a problem with the reckless and

speculative reporting by some media organizations claiming that

a religious organization is merely creating a pretext to cause a

problem. These media organizations have not gone through any

formal process to confirm the facts with the plaintiff in this

case. By publishing unfiltered speculation, they have abdicated

their mission as media institutions.

A basic asset is at the core of this suit, which must be seen as

a process in which the foundation corporation that has been

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Press Release on Yeouido (Parc One) Case

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