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.