Execs Were Aware of Hyundai Slush Fund

The chiefs of the five investment firms arrested on April 4 in the ongoing Hyundai-Kia Automotive Group slush fund probe confessed their direct management of slush funds for group chairman Chung Mong-koo and Kia Motors president Chung Eui-sun yesterday.

The prosecution plans to convict the two Chungs, father and son, on grounds of embezzlement based on that testimony.

According to an official of the prosecution yesterday, the Supreme Public Prosecutors’ Office (Chief: Park Young-soo) was able to secure the testimony during its interrogation of three of the five investment firm heads, including Mr. Yoon, chief of C&C Capital, under investigation.

It was reported that the heads of the investment firms testified their awareness of the fact that the investment funds they received from Hyundai Automotive Group were part of its slush fund.

“Although criminal punishment proves hard to apply on cases where slush funds are merely created and then stored, if the illegal funds are used for certain purposes, say investment, charges on embezzlement are possible,” said an official at the Prosecution.

The prosecution found traces of President Chung’s direct involvement in the creation of slush funds, after searching through Hyundai Automotive Group’s headquarters and conducting investigation on its financial department officials and some of its confiscated items.

The prosecution believes that a noticeably large amount of cash from the slush fund, worth tens of billions of won, has flowed into the hands of the five investment firms in an investment fund form, while not under the name of chairman Chung or president Chung, but of a third person. It believes the actual possessor of the fund could be either one of them.

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