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Hyundai Slush Fund Probe Imminent

Posted March. 29, 2006 08:01,   


Prosecutors are expected to expand their investigation of the activities of former Investus Global president and lobbyist Kim Jae-rok and to include allegations of a Hyundai-Kia Motors slush fund.

The ongoing probe is focusing on Kia Motors President Chung Eui-sun, the largest shareholder in Glovis, the Hyundai Motors transport affiliate that is suspected of creating the slush fund. A probe of Hyundai Motors Chairman Chung Mong-koo has not been ruled out.

The Supreme Prosecutors’ Office issued an arrest warrant for CEO Lee Ju-eun of Glovis on charges of creating a slush fund worth six to seven billion won yesterday.

The prosecution is also investigating any involvement by company leadership, including Hyundai and Kia presidents, and is questioning executives suspected of links to illegal activities.

Prosecutors originally considered a ban on both Chung Mong-koo and Chung Eui-sun from leaving the country, but changed their mind given their frequent business trips overseas.

The prosecution suspects that Hyundai Motors Group’s primary affiliate Hyundai Motor Co. managed at the Hyundai Group level a large sum of funds which were prepared by subsidiaries such as Glovis and Hyundai Autonet.

Prosecutors also said it will expand the scope of investigation into Hyundai Motor Co. to other corporations that took advantage of lobbyist Kim’s close ties with government officials

Prosecutor Chae Dong-wook of the Supreme Prosecutors’ Office said, “Once we sort through materials seized from our raid, we will see other companies’ cases. However, they are not as big as the Hyundai Motors Group case.”

Meanwhile, the large research center expansion project in Yangjae-dong, Seocho-gu, Seoul turned out to be the only allowed case under the renewed regulations since December 2004.

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