Board of Audit & Inspection Examined Hyundai Marine Merchant Concerning The $400 Million Loan Scandal

Where is the money gone? It`s a question regarding the $400 loan Hyundai Marine Merchant obtained from Industrial Bank.

Grand National Party argues that it was given to North Korea as a secret aid, while Millennium Democratic Party alleges it was used for financing Hyundai affiliates.

On top of that, Hyundai itself has consistently contended that the loan was used to pay back debts and fund its business projects, as notified on the loan application form.

Only $150 million was believed to be used for funding Hyundai`s business projects, announced the Board of Audit and Inspection based not on its examination of the banking records, but on the auditing reports of Industrial Bank. It also confirmed that it has not found out where the rest of the loan was spent due to its inability to track the relevant banking records.

As to the $150 million, the board made such inference from names the shown in the endorsements written on the checks that went to the bank for negotiation.

The checks show that Hyundai spent an amount a little short of the $150 million to pay back its debts over two occasions in 2000. That is how the board could come up with the figure.

Nonetheless, it is not known for sure whether the $150 million constitutes part of the loan in question, or another loan Hyundai made from a source other than Industrial Bank.

Upon approval of its loan application, Hyundai withdrew the whole amount in 65 checks issued by the bank on June 7, 2000, and deposited them into various banks over the period of June 8 to 18.

Last year`s congressional auditing uncovered that one fourth of the loan was deposited into the corporate account of Kyobo Securities, arousing a speculation that Hyundai Marine Merchant consumed the loan to secure more shares during the internal struggle among sons of Hyundai founder Chung Ju-young.

To identify the items the money used for, it is necessary to conduct a thorough scrutiny of each deposit Hyundai made, including the one deposited into the corporate account of Kyobo Securities.

In turn, without examining all the accounts of Hyundai Marine Merchant, a comprehensive picture would not be drawn out. Thus, the figure the board offered is just a ballpark figure, which does not clearly show anything about the portion of the loan allegedly used for business purposes.

Looking at the other side of the coin, it is presumed that much more sophisticated methods would have been employed for money-laundering the rest of the loan not returned to the bank for negotiation.

The matter becomes more complicated, if Hyundai had deposited the rest into foreign banks operating in Korea, since our government has no jurisdiction over them for the purpose of auditing.

Experts say, "If Hyundai had intended to use the loan for business purposes as alleged, it would not have had to split it into 65 checks. We cannot help suspecting a money laundering for `some` purpose."

Do-Young Kim nirvana1@donga.com