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Hyundai Asan Executive Created 864 Million Won Slush Fund

Hyundai Asan Executive Created 864 Million Won Slush Fund

Posted October. 01, 2005 07:43,   


It was confirmed that Kim Yun-kyu, Vice Chairman of Hyundai Asan, set aside 864 million won in slush funds in the process of pushing forward the Mt. Geumgang project, and illegally used $500,000 (approximately 525 million won) from the inter-Korean cooperation fund.

Kim reported the entire amount of the slush fund as losses for Hyundai Asan.

After this newspaper reported the fact that Kim illegally used the inter-Korean cooperation fund, the Board of Audit and Inspection of Korea (BAI) is considering expanding the inspection over the inter-Korean cooperation fund, which is currently being conducted of the Ministry of Unification, into a special inspection of Kim.

An internal inspection report of the Hyundai Group obtained by this newspaper says, “About $500,000 out of (Kim’s) slush fund from the Mt. Geumgang project is related to the inter-Korean economic cooperation fund (a miswriting of the inter-Korean cooperation fund),” adding, “It is expected that the government may want to conduct an inspection into the Mt. Geumgang project.”

A high-ranking official at the Hyundai Group explained, “Kim created the slush fund by inflating the costs in the road improvement contract with the group’s North Korean partner from the inter-Korean cooperation fund.”

The report also said, “The entire amount of the slush fund was written off as losses by Hyundai Asan,” confirming that Kim’s stockpiling of slush funds led to losses by the company.

A high-ranking official of the BAI said on the same day, “The investigation would have been the responsibility of the police. But it is the responsibility of the BAI if it is revealed that Kim illegally used the inter-Korean cooperation fund,” adding, “We will positively consider a special inspection of Kim.”

The prosecution is also planning to embark an inspection if there is a request from the BAI or the Hyundai Group.

The Hyundai Group said in a publicity document that day, “The corruption scandal of Hyundai Asan Vice Chairman Kim Yun-kyu that was reported by the media on September 30 is mostly true.”

The company also said, “We will determine the future of Kim in the company and do everything possible to establish a transparent and reasonable North Korea business system,” suggesting that the company is considering stripping Kim of the title of vice chairman.

Meanwhile, the Unification Ministry argued that day, “Given that the government did not give money directly to Hyundai Asan and that it assisted the inter-Korean cooperation fund through the Korea National Tourism Organization, the Export-Import Bank of Korea and the Supply Administration, rather than through Hyundai Asan, the report that Kim set aside slush funds by illegally using the inter-Korean cooperation fund is not true.”

However, Nam Sung-wook, a Korea University professor of North Korean studies, pointed out, “As funds and budgets come from the taxpayers’ money, it is only natural that the Unification Ministry is responsible for the monitoring of the management and execution.”