Police Expand Automaker Lobbying Probe

Prosecutors are expanding their investigation into the lobbying efforts of Hyundai-Kia through ex-Investus Global CEO Kim Jae-rok (46).

The Central Investigation Department of the Supreme Public Prosecutor’s Office (Chief Park Yeong-su) learned on March 27 that the Hyundai Motor Group gave Kim billions of won to use to promote the construction of a research and development center in Yangjae-dong, Seoul where the company’s headquarters is located.

Prosecutors have confirmed that Seoul authorities originally ruled that an expansion of the Hyundai Motor Group’s headquarters in Yangjae-dong was not possible because the area had been designated for distribution facility lots according to city plans. But it was confirmed that the Seoul city urban planning committee reversed its ruling and allowed the expansion to proceed last January.

The Seoul urban planning committee approved on January 19, 2005 a plan for a building with 21 floors above ground and three floors below ground.

The prosecution considered that in order to change urban planning’s facilities plan, which was originally opposed to the building enlargement, the Hyundai Motor Group probably lobbied top Seoul administrators through Kim.

The prosecution also verified that the Ministry of Construction and Transportation altered related legislation so that the research building was included in a subsidiary facilities clause, and investigations are underway to see if this was accomplished through Kim’s lobbying efforts.

The prosecution plans to call in officials from Seoul city, the urban planning committee, and the Ministry of Construction and Transportation.

In order to verify the details of Hyundai Motor Group’s creation and delivery of slush fund, the company’s transport affiliate Glovis CEO Lee Joo-eun and financial team leader Mr. Kwak have been arrested and are currently being investigated.

The prosecution has also forbidden over 10 people involved with the creation of the slush money and suspected of intervening in the lobbying affiliated with Hyundai Motor Group’s General Planning Division from leaving the country.

In addition to the fact that Hyundai Motor Group Chairman Chung Mong-koo’s son Chung Eui-sun, Kia Motors President, is the largest shareholder of Glovis, which raised the slush fund, taking into account the current group’s succession planning, it has fully supported the company, so the prosecution’s investigation will probably include the succession of the Hyundai Motor Group.

On that day, the prosecution called in Woori Bank employees, in order to examine financial firm’s lobby related to Kim’s 82.5 billion won loan arbitration, questioning the legitimacy of the loan.

Tae-Hoon Lee jefflee@donga.com needjung@donga.com