Seoul summons five more tycoons

Seoul summons five more tycoons

SEOUL (Reuter): State prosecutors grilled top South Korean business leaders yesterday and summoned another five to probe their links with former president Roh Tae-woo's US$654 million slush fund.

The chairmen of the Doosan, Haitai, Kolon, Kohap and Hyosung groups will come in on Thursday, prosecutor Ahn Kang-min, leading the probe into the fund scandal, told reporters.

The heads of Samsung, LG and Dong Ah arrived early yesterday at the Seoul Prosecutor-General's Office.

Daelim Group chairman Lee Joon-yong, Hanil Group chairman Kim Jung-won and Dong Bang Group chairman Myoung-soo also were called in.

Shin is a relative of Roh by marriage.

Ahn told reporters prosecutors had evidence the giant Daewoo Group helped Roh hide 30 billion won ($39 million) in secret bank accounts.

Prosecutors on Tuesday questioned Kum Jin-ho, former trade minister and Roh's relative by marriage.

Ahn told reporters Kum acted as a middleman in helping Roh switch 89.9 billion won ($116.8 million) from borrowed-name bank accounts into real-name accounts. This included 30 billion won ($39 million) handled by Daewoo, he said.

He said Kum told prosecutors he asked the Hanbo Group to help Roh hide 59.9 billion won ($77.8 million). Prosecutors previously said Hanbo chairman Chung Tae-soo helped Roh conceal 50 billion won ($64.9 million).

A senior Hanbo executive said the group took the money as a soft loan. "We did not give money to former president Roh in bribes," he said by telephone.

Search warrants were sought for four commercial banks, including the Commercial Bank of Korea, to track down money that Roh allegedly used in property transactions, Ahn said.

He said 16 accounts in the four banks would be searched. He did not name the other three banks.

Another prosecution official said Roh was suspected of having used some of the $654 million slush fund he amassed during his 1988-93 term to buy two buildings in Seoul.

"We are investigating four businessmen, including Shin Myong- soo, in connection with funds relating to real estate," Ahn said. He declined to name the other businessmen.

"However, it is not clear yet whether Mr Roh or his relatives were involved in the purchase of real estate."

There is no dispute that most of the country's major conglomerates, known as chaebol, helped top up Roh's slush fund. The question is whether donations were kickbacks aimed at winning major state infrastructure and defense-related projects.

Also at issue is whether the chaebol heads helped Roh launder the money by supplying borrowed-name bank accounts or by using it as loans for their operations.

Samsung is South Korea's largest conglomerate in terms of sales. It is the world's largest maker of computer memory chips, builds ships and has billions of dollars of investments in Europe and the United States.

Samsung chairman Lee Kun-hee, 52, is the son of the group's late founder Lee Byung-chull. He is largely credited for Samsung's emergence as a global force.

LG, whose chairman is Koo Cha-kyung, is the third-ranking conglomerate and its multi-layered business embraces everything from consumer electronics to petrochemicals.

Dong Ah is a leading construction group with massive contracts in the Middle East. It helped build a bridge in Seoul which collapsed in October last year, killing 32 people, and has been under a cloud ever since.