School friend of Kang arrested for money laundering

State prosecutors arrested a middle school friend of Rep. Kang Sam-Jae Saturday on suspicion that he accepted 200 million won from Kang in return for laundering 92.5 billion won the lawmaker allegedly received from the state intelligence agency ahead of the 1996 general election.

The opposition Grand National Party (GNP) assemblyman allegedly accepted 94 billion won from the then Agency for National Security Planning (NSP), now the National Intelligence Service (NIS), in campaign funds for the then ruling New Korea Party (NKP), predecessor of the GNP.

The Central Investigation Department of the Supreme Public Prosecutor¡¯s Office, which is investigating the misappropriation of NSP funds, identified the suspect as Chu Young-Do, 48, former Seoul branch chief of Kyungnam Merchant Bank. Prosecutors plan to summon Kang for questioning as soon as the ongoing extraordinary National Assembly session wraps up at the end of this month.

They also decided to charge Chu with violating the Law on Additional Punishment for Specific Economic Crimes for allegedly offering bribes to Kang, who was already indicted without physical detention on charges of embezzling NSP budget funds in collaboration with Kim Ki-Sup, former deputy chief of the NSP.

Chu, whom Kang met in middle school, allegedly laundered 92.5 billion won of the 94 billion won in NSP funds during the general election period at the request of the lawmaker, who was then secretary general of the NKP. Chu allegedly received 200 million won in 200 one-million-won checks as a reward.

Kang is also suspected of entrusting Chu with 925 100-million-won checks on six occasions. He allegedly received the money from the former NSP deputy chief between December 1995 and September 1996 and asked Chu and to launder it through secret accounts opened under assumed names.

Prosecutors said Chu exchanged the money for one million won or 10 million won checks issued by commercial banks and handed them over to Kang.

They also said Kang gave the 200 million won to Chu while the two were parked in the latter`s car in front of a restaurant at the NKP building on Sept. 11, 1996.

Kang allegedly told Chu never to divulge that he had managed the fund.

Lee Soo-Hyung sooh@donga.com