Kim plans clean out after loan scandal

Kim plans clean out after loan scandal

SEOUL (AFP): South Korea's President Kim Young-sam met an influential business chief yesterday, signaling the start of a clean out of his government tainted by an explosive loans scandal.

Government officials declined to give details on talks between the president and Kim Mahn-je, head of Pohang Iron and Steel Co. (POSCO), who served as a top economic planning official under Kim Young-sam's predecessors.

But press reports said the POSCO chief had advised the president over how to bail himself out of the crisis triggered by a loans-for-kickbacks scandal, which has left confidants arrested and his second son under a cloud of suspicion.

Kim Mahn-je, one of the planners of the president's election campaign in 1992, was appointed in 1994 to head the state-run steel giant.

He is now seen as high on a list of candidates named by newspapers for key government posts.

The meeting came one day after Prime Minister Lee Soo-sung and his cabinet offered to step down following the resignations of ruling party leaders and top presidential aides.

The mass resignations were prompted by a public apology Tuesday by the president for the controversial behavior of his son and the arrest of one minister and three ruling party lawmakers on graft charges.

The apology failed to satisfy opposition parties, which have accused the son of collaborating with politicians to press banks to provide loans to Hanbo, the country's 14th largest conglomerate.

The scandal erupted on Jan. 23 when Hanbo Group subsidiaries collapsed under US$5.8 billion of debts, and has resulted in the arrest of 10 prominent figures including Kim's proteges.

Ruling New Korea Party (NKP) officials said a sweeping reshuffle in the party and government may come next week.