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Viewing cable 07SEOUL2048, GAP IN POLLS CLOSING BETWEEN TWO GNP HEAVYWEIGHTS

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Reference ID Created Released Classification Origin
07SEOUL2048 2007-07-09 23:03 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Seoul
VZCZCXYZ0002
RR RUEHWEB

DE RUEHUL #2048/01 1902303
ZNR UUUUU ZZH
R 092303Z JUL 07
FM AMEMBASSY SEOUL
TO RUEHC/SECSTATE WASHDC 5426
INFO RUEHBJ/AMEMBASSY BEIJING 2789
RUEHKO/AMEMBASSY TOKYO 2901
RUEKJCS/SECDEF WASHINGTON DC//OSD/ISA/EAP//
RHHMUNA/CDR USPACOM HONOLULU HI
RUEHIN/AIT TAIPEI 2053
RUALSFJ/COMUSJAPAN YOKOTA AB JA
RHMFISS/COMUSKOREA J2 SEOUL KOR
RHMFISS/COMUSKOREA J5 SEOUL KOR
RHMFISS/COMUSKOREA SCJS SEOUL KOR
RHEHNSC/NSC WASHINGTON DC
UNCLAS SEOUL 002048 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL KS
SUBJECT: GAP IN POLLS CLOSING BETWEEN TWO GNP HEAVYWEIGHTS 
 
1.  (SBU) SUMMARY: The gap in polls between the frontrunner 
Lee Myung-bak and his rival Park Geun-hye from the 
conservative Grand National Party (GNP) started to drop off 
significantly in recent weeks.  The shrinking gap comes from 
Lee's falling popularity amid revelations by Park's camp and 
the ruling Uri Party about his alleged involvement in 
investment fraud and shady real estate dealings.  An 
"official" report casting doubt on his canal project has also 
impacted Lee's poll numbers.  Public polls for Lee and Park 
are crucial as their result counts for 20 per cent of the 
candidates' scores in the GNP primary.  Pundits posit that 
Lee's decrease in polls could accelerate if more scandals 
emerge.  END SUMMARY. 
 
----------------------------------- 
LEE MYUNG-BAK'S SHAKY LEAD IN POLLS 
----------------------------------- 
 
2.  (U) The latest polls show that presidential frontrunner 
Lee Myung-bak of the Grand National Party maintains a 6.5 
percent to 15 percent lead over his rival Park Geun-hye.  In 
polls conducted on June 30, the difference between the two 
was 6.5 per cent (Herald Media), 11.8 per cent (Chosun Ilbo), 
12.8 per cent (SBS), 13.9 per cent (Donga Ilbo) and 15.4 per 
cent (MBC).  Lee scored 34.9 - 39.8 per cent while Park 
garnered 24.9 - 27.6 per cent of the public support.  (Note: 
the polls surveyed 1,000 - 1005 adults nationwide.  End 
Note.) 
 
3.  (U) Although Lee has maintained his lead over Park, the 
gap between the two candidates has significantly decreased, 
compared to polls earlier this year.  According to a poll 
conducted by Herald Media and KM Research Co. on December 
26-27, 2006, Lee boasted sweeping popularity by garnering 
42.6 percent of support, well ahead of Park Geun-hye's 23.9 
percent.  (Note: the poll surveyed 1,000 adults nationwide. 
End Note.)  In February 2007 polls, Lee Myung-bak scored 43.9 
percent and 47 per cent in two polls, while Park scored 17.9 
per cent and 19.4 per cent.  (Note: The first poll was done 
by Korea Research Center and Donga Ilbo; the second poll by 
Hankyoreh and Research Plus.)   Therefore, Lee's lead had 
declined from 20-25 to around 10 per cent in about a month or 
so. 
 
--------------------------------------------- ---------- 
BBK DEAL: LEE'S ALLEGED INVOLVEMENT IN INVESTMENT FRAUD 
--------------------------------------------- ---------- 
 
4.  (U) June was a brutal month for Lee as he was shrouded in 
scandals.  Since early June, Lee has been continuously 
attacked by the Park camp and Uri Party as they accused Lee 
of being involved in stock manipulation and real estate 
speculation.  On June 11, Representative Park Young-sun from 
the Uri Party argued during a plenary National Assembly that 
Lee previously had an illicit business relationship with a 
now-bankrupt investment firm, BBK.  According to press 
reports, Lee invested in the firm, established in February 
2000 by a Korean-American businessman, Kim Gyeong-jun.  In 
2001, Kim allegedly spread false information to manipulate 
BBK's stock price and embezzled KW 38 billion (USD 41 
million) of the firm's money.  Kim then was arrested by U.S. 
federal authorities in 2004 and is awaiting extradition to 
Korea.  Joining the Uri Party's attack on Lee, Park's camp 
also argued that Lee was the firm's actual owner, not just an 
investor.  Lee's camp refuted the claim, saying that "Lee has 
no relationship with BBK, and BBK is solely operated by Kim 
Gyeong-jun," and made public the document issued by the Seoul 
prosecutors in April 2002 that cleared Lee. 
 
--------------------------------------------- ------------ 
CANAL PROJECT: GOVERNMENT CONSPIRACY VS. ILLEGAL RESEARCH 
--------------------------------------------- ------------ 
 
5.  (U) However, the so-called BBK scandal was only the 
beginning of several trials.  One of Lee's main campaign 
pledges is the "Pan-Korea Waterway Project," which aims to 
connect the country by canals.  The canal project's economic 
and environmental feasibility has been at the center of 
political debates.  On June 4, the Korean publication 
Economist, an economic news weekly, reported on a 37-page 
report by South Korean government agencies, which claimed 
that the canal project was not feasible neither financially 
nor environmentally.  (Note: Korean Economist is different 
from the U.K.-based magazine, Economist.  End Note.)  When 
questioned by the National Assembly, Construction Minister 
Lee Yong-seop said the 37-page report was not a government 
document, but admitted that the ministry had submitted a 
different, 9-page report on the project to the Blue House. 
The ministry then submitted the 9-page original report to the 
National Assembly, which proved virtually identical in 
substance to the leaked 37-page report. 
 
6.  (U) Although the leakage of the report helped to bolster 
Lee's argument that liberals are conspiring to destroy him 
and the Blue House is the "big power" behind the alleged 
conspiracy, the canal project saga continued to work against 
him.  On June 22, Seoul Metropolitan Police raided the 
city-affiliated Seoul Development Institute, Seoul Economic 
Research Center and offices of three Sejong University 
professors to further investigate the matter.  They were 
investigating whether a report prepared by the Institute and 
the Center when Lee was a mayor of the capital was conducted 
for the purpose of working out his eventual campaign pledge, 
hence violating an election law. 
 
------------------------------------ 
SUSPICION OF REAL ESTATE SPECULATION 
------------------------------------ 
 
7.  (U) On June 12, an Uri Party lawmaker and presidential 
hopeful, Rep. Kim Hyuk-gyu, raised the suspicion of false 
resident registration by Lee Myung-bak's wife.  At a press 
conference in the National Assembly, Kim argued that Lee's 
wife changed her address fifteen times from 1978 to 1998, 
mostly in Kangnam, possibly for investment in the area's real 
estate, but failed to produce evidence to support his claim. 
Pointing out that two Prime Ministers from Kim Dae-jung 
administration failed to be confirmed by the National 
Assembly because of similar accusations of real estate 
speculation, Kim called for Lee's clarification.  Lee later 
admitted the fact and apologized, saying that the false 
resident registration allowed his children to attend good 
schools in the affluent Kangnam area and for him to run for 
office in a different district from which he lived. 
 
8.  (U) On July 2, Kyunghyang Shinmum, a pro-government 
Korean newspaper, reported that Kim Jae-jung, Lee's 
brother-in-law currently owns properties in 47 different 
regions nationwide, and raised suspicions of real estate 
speculation.  The article stated that beginning with 
1,657,334 square-meters of forest land in North Chungcheong 
Province in 1982, Kim bought properties covering 2.24 million 
square-meters in 47 different regions between 1981 and 1991. 
Responding to the report, Lee's camp said, "Kim's real estate 
transactions have no direct relation to Lee."  Meanwhile, Kim 
sued for libel the newspaper that ran the article and asked 
for KW 1.5 billion (USD 1.6 million) in reparation, saying 
that the article was a malicious defamation. 
 
9.  (U) On July 3, Hankyoreh, a liberal Korean newspaper, 
reported that Lee, while mayor of Seoul, lifted restrictions 
on building heights in Seocho-dong, Seocho-gu, where he owned 
a building.  The newspaper also claimed that Lee and his 
relatives' properties were in Eunpyeong-gu, which was 
designated by the then-mayor himself as the 'New Town' for 
development, and raised suspicions on the designation 
process.  Refuting the claims, Park Hyeong-jun, a spokesman 
for Lee's camp, said "removal of the height restriction was 
already demanded by the Board of Audit and Inspection and the 
Ombudsman of Korea (before Lee took action)."  He added that 
the real estate Lee owned in Eunpyeong-gu was only 142 
square-meters, which he sold before the designation. 
 
10.  (U) On July 5, Hankyoreh again accused Lee and his 
relatives of profiting from real estate dealings 
inappropriately.  According to the paper, his brother and 
brother-in-law, Kim Jae-jung, allegedly bought a land parcel 
in Dogok-dong totaling approximately 1,313 square-meters when 
Lee was CEO of Hyundai Engineering and Construction.  They 
then sold it, together with some other land sites, to POSCO 
Engineering and Construction in 1995 and profited KW 26.3 
billion (USD 28.6 million).  In addition to this report, Seo 
Cheong-won, an advisor to Park Geun-hye, alleged that Lee, 
Lee's brother and brother-in-law owned a 6,555 square-meter 
site in Dogok-dong.  Seo argued that "Lee met with the POSCO 
president three times between 1993 and 1994 and is known to 
have asked him to buy the site, saying that it is his." 
Lee's camp countered the argument, saying that the sale of 
the site was legitimate and that the issue was verified as 
compliant with all regulations during the 2002 Seoul mayoral 
elections, which Lee sub 
sequently won. 
 
11.  (U) On July 6, Seoul Prosecutors' Office announced that 
they would investigate the libel and counter-libel suits 
between Lee's camp and Park Geun-hye's camp, stemming from 
the alleged illegal real estate dealings.  It would not only 
subpoena Kim Jae-jung, Lee's brother-in-law, but also look 
into Lee's alleged illegal property deals.  While Lee's camp 
strongly resisted, the Park camp welcomed the move. 
Concerned whether this will lead to a replay of the 2002 
election, where the many suspicions and prolonged 
investigation proved detrimental to the party, GNP officials 
urged both camps to retract their charges. 
 
---------------------- 
ANOTHER FIGHT EXPECTED 
---------------------- 
 
12.  (U) Although Lee has kept his lead in polls, Lee and 
Park are expected to fight over rules on public polls which 
would make up 20 percent of the GNP primary in August.  At 
the first meeting of the GNP Public Poll Expert Committee on 
June 29, the representatives from the two camps butted heads 
over how to word the question that would assess the 
candidates' popularity.  Lee's camp argued that the question 
should measure the respondents' "preference" by asking them 
"whom they prefer as the GNP presidential candidate."  Park's 
camp maintained that the question should measure their 
"support" by asking them "whom they would vote for on the day 
of election."  Pundits on public polling say that respondents 
"prefer" a candidate even if they don't fully support him; 
but answering the "support" question requires them to be more 
committed to the candidate.  Lee's supporters are considered 
to be less committed to Lee, compared to Park's supporters. 
Thus, he prefers the "preference" questions while Park 
prefers the "support" question. 
 
------- 
COMMENT 
------- 
 
13.  (SBU) Scrutiny on Lee and mudslinging between the two 
GNP frontrunners will peak as the GNP Verification Hearing 
comes around on July 19.  It is an open secret that the 
ruling camp considers Park Geun-hye to be an easier candidate 
to beat in December than Lee Myung-bak.  Thus facing 
incessant attacks on two fronts, Lee has taken a severe 
beating, resulting in an enormous slide in his poll numbers. 
If Lee cannot turn this around, all bets are off on what 
appeared to be a shoo-in candidacy only a month ago. 
VERSHBOW