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Hyundai Boss to Return for Questioning

Posted April. 08, 2006 03:05,   


Hyundai Automotive Group chairman Chung Mong-koo, who is now in the United States, will return to Korea for questioning over slush fund allegations. His decision to return seems to be the result of pressure from prosecutors.

Prosecutors warned that they would step up their investigation if he delayed his return and said they would summon Chung Eui-sun, president of Kia Motors. It is thought that this was what convinced Chung Mong-koo to return.

Chung left for the U.S just as the investigation into the group’s bribery of politicians and illegal wealth transfers was underway. He is suspected of trying to escaping the investigation.

Hyundai Automotive Group discloses Chung’s schedule-

Hyundai Automotive Group distributed Chung’s recent schedule in the U.S. in detail to reporters ahead of his return, an unusual step. The group used to disclose his schedule only after he goes on business trips.

The unusual step suggests that the group is under pressure from the prosecution.

According to the handout, Chung visited sales offices in Los Angeles, and the site of a future Kia Motors Design Research center in Irvine, California.

He also visited Hyundai Translead, an automotive component manufacturing company in Tijuana, Mexico and reviewed plans to increase the manufacturing facilities there.

He did not visit Hyundai’s Alabama plant or Kia Motors’ plant in Georgia, even though he had planned to visit those places in the first place.

Hyundai Automotive said, “Since the ground-breaking of the Kia Motors plant has been delayed, he changed his plan.”

The disclosure of his schedule seems to be designed to mute the suspicion that he left for the U.S. to escape the investigation.

Personnel of Hyundai Motors’ Public Relations office are continuing to say that he went to the U.S. for management activities, not for avoiding the investigation.

Hyundai Automotive Group also added, “Chung will have a press conference as soon as he returns on April 8 and disclose his purpose of departure and activities in the U.S.”

According to an insider of the group, he will say that he will closely cooperate and accept a summons issued by the prosecution.

Chung may apologize-

Hyundai Automotive Group is deliberating the formality and the timing of a possible apology from Chung.

The insider of the group said, “It is expected that he will cooperate with the prosecution, answer questions from reporters, and make an apology to the public. He added, “He may consider donating his family’s fortune to society. But some expressed worry about it, fearing it could be counterproductive.”

Chung’s return has been a relief for the company, however. The investigation has taken a toll on the group’s credibility. If Chung cooperates with investigators, management will be stabilized.

But some say that if the investigation reveals more irregularities and illegal activities, his appearance of participating in the group’s management may backfire.

If that happens, the firm’s credibility may fall and the group could have difficulty raising capital.

Sung-Won Joo Hyo-Lim Son swon@donga.com aryssong@donga.com