Unification Church attacks Seoul skyscraper plan

Financial Times/January 19 2011

One of South Korea's landmark foreign investment projects - a $2bn deal to build skyscrapers designed by British architect Richard Rogers - has prompted a bitter legal challenge from a branch of the Unification Church, often known as the Moonies, who own the land.

The lawsuit has stalled financing for the project managed by Skylan, a pan-Asian developer with British managers, including several relatives of Lord Rogers.

The company broke ground on Seoul's Parc 1 complex in 2007 to build a luxury hotel, offices and shopping mall. The 270m towers are intended to be the jewels in the crown of Seoul's growing financial district, Yeouido island. The city's mayor has hailed Parc 1 as a symbol of South Korea's growing warmth towards foreign investment.

Skylan has been joined in the project by engineering conglomerate Arup and South Korean builder Samsung C&T. However, the church's Tongil Foundation, responsible for the land, says it filed a lawsuit last year seeking that the Parc 1 contract be nullified.

The foundation's lawyer, Sung Jin-hyuk, said the suit accuses the Y22 Project Financing Investment, the vehicle through which Skylan manages the development, with fraudulently contravening the lease agreement.

If the lawsuit and protests scupper the contract and the development is thwarted, it could be a big setback to South Korea's attempts to improve its reputation as a destination for foreign direct investors, hurt by failed deals such as HSBC scrapping its $6bn bid to buy Korea Exchange Bank in 2008 because of political and regulatory resistance in Seoul.

The Unification Church, which has gained international notoriety for its mass blessings of arranged weddings, says Y22 first agreed to return the complex at the end of a 99-year lease running from 2005. After that, the Unification Church says it plans to turn Parc 1 into its global headquarters. But it claims the international developers now plan to sell some of the complex to financial institutions.

It argues these sales will prevent the church from reclaiming the property at the end of the 99-year lease unless it also buys the towers complex. Church members intermittently gather at the site to protest against the sale.

"The land is a holy place for us and we want to use part of the buildings for the church once we get them back but Skylan is trying to sell the buildings to others, said a planning official at the church.

A spokesman for Shinhan bank, the lead financier charged with raising Won1,800bn ($1.6bn) for the project, said the bank was struggling to do so because of the lawsuit. He added that the bank did not see investors returning until the case was concluded.

Skylan and Y22's lawyers declined to comment but sources close to the foreign investors said Skylan had assured the church it would not lose its rights if third parties bought real estate.

According to sources close to the dispute, Lord Rogers' partnership in London has sought clarification from Y22 on how "the project will be managed in the future".

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