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Hyundai Chair Accused of Embezzlement

Posted April. 28, 2006 06:57,   


The Central Investigation Department (headed by senior prosecutor Park Young-soo) of the Supreme Prosecutor’s Office, which is investigating the slush fund allegations involving the Hyundai Kia Motor Group, sought an arrest warrant against Hyundai Motors Chairman Chung Mong-koo on charges of embezzlement and misfeasance in office under the Enforcement Decree of the Act on the Aggravated Punishment of Specific Economic Crimes.

The prosecutor’s office decided to indict Chung Eui-sun, president of Kia Motors and the son of Chung Mong-koo, without physical detention on the same charges, and will decide the level of legal action against the senior executives of Hyundai Motor Group involved in the case around mid-May when it plans to prosecute Chung. Whether to detain the chairman will be decided in the afternoon of April 28 after the warrant substance examination by the Seoul central district court.

The prosecution’s move is likely to affect the management of the group. On the decision to arrest chairman Chung, Prosecutor General Chung Sang-myeong made a comment in the morning of April 27, saying, “The decision was made in accordance with law and principle.”

According to the prosecutor’s office, Chung of the Hyundai Motor Group is accused of inflicting damage of about 300 billion won on the company from 2001 to the early this year, including embezzling 100 billion won from its six affiliates including Hyundai Motors in collusion with president Chung and Hyundai Motor Group’s senior officers.

Chae Dong-wook, the superintendent prosecutor at the Supreme Prosecutors’ Office, said, “We made the decision after a thorough consideration of the current national economic situation and the company’s difficult business conditions. We believed that we should bring a person responsible for illicitly causing damage to a company to justice.”

Chae also said, “The charges against him are serious ones with a huge amount of the damage done to affiliates, and there is high concern over possible destruction of evidence, such as the changing of words by involved senior executives.” As to legal action against high-ranking officers at Hyundai Motor Group, Chae said, “We will be careful in making that decision so that it will not have negative impact on the business.”

The prosecution plans to conclude the slush fund allegation by the end of this month and launch a probe into the illegal lobbying allegations in which the company bribed high-ranking government officials and politicians for business favors starting in early May.

The prosecution will also continue its investigations into Kim Jae-rok, 46, a financial broker who is now in custody, and on Kim Dong-hoon, 58, former head of an accounting firm in Seoul, who was arrested on charges of involving the illegal lobby for the debt waiver for Hyundai Motor Group’s affiliates.

Meanwhile, the company announced, “The company has no plans to run an emergency management system or to launch a special task force.” But given that chairman Chung has been directly involved in the decision-making process on major business activities, the company will find it difficult to start new businesses or make a large-scale investment for the time being.