Hynix Suspected of Involvement in Secret Aid to North Korea

In May of 2000, just before the summit between North and South Korea was held, former Hyundai Electronics, Inc. (now, Hynix Semiconductor, Inc.) reportedly wired $100 million to a paper company (which refers to a company exists only on paper) that had been set up by Hyundai Construction. The paper company got dismissed right after receiving the money. Thus, Grand National Party`s allegation has been verified as true.

The method used by Hyundai affiliates is a typical example of money laundering. The dismissal took place just about 15 days prior to the time when Hyundai Merchant Marine Co. allegedly sent, on behalf of Kim Dae Jung administration, $400 million to North Korea in early June. Thus, it is highly suspected that Hynix played a role in sending the secret aid to North.

It has also become known that Hynix hid the wire-transferring from its major creditor bank, and Hyundai Construction also knowingly omitted on its auditing report its establishment of the paper company and the company`s reception of the transferred money. In response, Hynix explained on Nov. 1, "We had sold our plant in Scotland for $162 million. Out of the $162 million, we wire-transferred $100 million to Hyundai Alkapachi, Inc., in the Middle East. That`s what we have found out so far."

Hynix recorded the $100 million as a short-term loan on its book. Then, on the closing for the year of 2000, it set off all of the amount upon its determination that the loan was not collectible.

A CPA commented, "They set off the short-term loan just after 7 months. It means that the management knew from the beginning that they would probably not be able to collect on the loan. Therefore, the management could be charged with intentional negligence."

The Foreign Exchange Bank, the main creditor bank of Hynix, said, "We got to know of the wire-transferring only in April of 2001 when the auditing report became available to us. We have demanded that Hynix should explain the whereabouts of the money. But it has refused to give us an answer. Thus, we simply do not know where the money was spent."

Therefore, to find out the truth regarding the secret aid to North, a probe should be conducted not only into Hyundai Merchant Marine, but also into all affiliates of the Hyundai group.

Joong-Hyun Park Do-Young Kim sanjuck@donga.com nirvana1@donga.com