Hanbo suspected of illegal takeover of N. Korean mill

Hanbo suspected of illegal takeover of N. Korean mill

SEOUL (AFP): South Korea's collapsed Hanbo conglomerate faced
fresh accusations yesterday of spending US$3.3 million on an
illegal project to take over a North Korean steel mill last year.

The Hankook newspaper charged Hanbo diverted $3.3 million from
$10 million authorized by the government for investment in
Venezuela to its secret project to take over the North's Hwanghae
Steel Mill.

The newspaper quoted prosecution sources as saying a son of
Hanbo's failed patriarch Chung Tae-Soo pushed the North Korean
project two years ago when the group won approval to invest in a
Venezuelan iron ore firm.

A Hanbo official based in Singapore visited China last
September to buy management of the North Korean steel mill, it
said.

But the project faced trouble when the family-controlled
conglomerate went belly-up under $5.8 billion of debt in January,
the newspaper said. Unauthorized contacts with North Korea are
punishable under South Korea's tough National Security Law.

The accusations followed the discovery of more millions
embezzled by the Hanbo founder, already indicted for embezzling
$122 million to buy stocks for his family.

Prosecutors suspect some of the embezzled money might have
been used to bribe government officials and politicians to obtain
illegal loans.

Chung Tae-Soo's third son and heir, Chung Bo-Keun, 36, now the
group's chairman, was arrested last week on charges of embezzling
some $41 million.

Prosecutors also uncovered $380 million in assets hidden by
the tycoon and his family. The family assets will be impounded in
a move to collecting $485 million in back taxes.

Prosecutors yesterday called in bank officials for an
investigation into how the Chung family had stashed away and used
the hidden fund, television reports said.

Prosecutors were not available for comment yesterday, but
Yonhap news agency quoted a prosecution official as saying some
of the hidden funds might have been funneled to ruling and
opposition candidates during parliamentary polls in 1996.

"Chun Tae-Soo is suspected of embezzling a considerable amount
of company funds to create a slush fund," the official told
Yonhap, indicating more politicians could be arrested.

So far, prosecutors have arrested 11 prominent figures,
including three close aides of President Kim Young-Sam and a
former home minister, since the scandal erupted in January.

But prosecutors say they have not found any evidence of
wrongdoing by the president's 38-year-old son Kim Hyun-Chul,
accused by the opposition of being at the center of the scandal.

The president apologized for his son and reshuffled his
cabinet to deflect a public uproar, but the opposition stepped up
its offensive.

Some 2,000 radical students marched in central Seoul Saturday,
demanding the ouster of Kim Young-Sam, a former dissident who
took office in early 1993, and the arrest of his son and aides.

Smaller but more violent demonstrations were reported in at
least two other cities.

Hanbo's collapse, compounded by the failure earlier this month
of another steel giant Sammi, the country's 26th biggest
conglomerate, has prompted a series of government steps to
salvage troubled banks.

But the government efforts have failed to calm widespread
business concern over a domino of bankruptcies involving small
firms which depend heavily on bank loans for survival.