Seoul Corruption Scandal Widens, New Firm Hit

A corruption scandal swirling around South Korean President Kim Young-sams son claimed a new corporate victim on Wednesday, deepening a political crisis that has reduced Kim to a lame duck.

The main opposition National Congress for New Politics alleged associates of the presidents son managed more than 20 billion won ($22 million) of unspent funds from Kims 1992 presidential campaign.

Earlier, the Chosun Ilbo news paper reported that the Hansol Group, the nations 16th largest industrial conglomerate, looked after 7 billion won of that money.

Hansol denied the report. This is obviously leftovers from the presidential election fund, a National Congress statement said. The money is just a tip of the iceberg. Financing of the 1992 vote and a loans-for-kickbacks scandal involving failed Hanbo Steel Co have emerged as the most explosive political issues in the run-up to Decembers presidential elections.

 

President Kim is barred from seeking re-election. State-run Korea Broadcasting System (KBS) said the president planned to make a statement later this month over his election financing amid growing suspicions that he used money from Hanbo for his campaign.

A presidential spokesman declined comment on the KBS report. The president has said he had no direct hand in fund-raising.

The Chosun Ilbo reported that state prosecutors had evidence that Hansol managed seven billion won on behalf of a former intelligence official linked to the presidents second son, Kim Hyun-chul.

The prosecution refused comment on the report, which sent share prices of all seven listed Hansol companies tumbling on the Seoul bourse.

The groups flagship, Hansol Paper, is the countrys largest paper manufacturer. Talk about an influx of funds into the Hansol Group is not true, Hansol said in a statement. It described such reports as a misunderstanding.

State prosecutors have been investigating allegations that Kim Hyun-chul played a major role in the Hanbo scandal, meddled in state affairs and kept part of the 1992 election fund. Kim Hyun-chul, who helped engineer his fathers election win, denied the charges at a parliamentary hearing last month.

But the National Congress and two other opposition parties on Tuesday filed a request with the prosecution for legal steps against the presidents son for perjury during the hearing.

Last week, prosecution officials said there was no evidence linking Kim Hyun-chul with Hanbo Steel, which failed in January under $5.8 billion in debts.

But they indicated they had uncovered evidence of other wrongdoing and said an arrest warrant for Kim Hyun-chul would be sought this week. On Wednesday a prosecution official said legal steps would be delayed, probably for a week.

Two business associates of Kim Hyun-chul Park Tae-joong and Kim Hi-chang have been arrested on charges that they took bribes in return for promises to lobby the younger Kim to help them obtain government broadcast licences.

The National Congress statement on Wednesday accused Park of mangaging 13.2 billion won of election money.

(US$1 = 893 won)