Posted on 04/26/2006 11:16:47 PM PDT by HAL9000
SEOUL, April 27 (Yonhap) -- South Korea's prosecution on Thursday requested an arrest warrant for embattled Chairman Chung Mong-koo of the Hyundai Motor Group, who is accused of creating a huge slush fund to bribe politicians and government officials for business favors.Chung's only son and heir Eui-sun, the president of Kia Motors Corp., will be indicted without physical detention on the same charges, prosecutors said. Kia is a key affiliate of the country's second-largest conglomerate.
"We sought a warrant in the morning to detain Chairman Chung on charges of embezzling 100 billion won from the company coffers to create a slush fund and causing about 300 billion won worth of damage to the company through breach of trust," said Chae Dong-wook, a senior prosecutor at the Supreme Prosecutors' Office.
The court is scheduled to decide whether to issue an warrant on Friday.
The two Chungs have been at the center of allegations that the country's second-largest conglomerate used the secret fund from major affiliates since 2002 to bribe officials and politicians for help in obtaining construction permits, reducing debts and other favors for its ailing affiliates.
The chairman is also suspected of helping his son increase his stakes in Hyundai affiliates to ease the transfer of managerial control of the group from father to son.
Chae stressed there was a need to strictly deal with those responsible for causing damage to firms "according to laws and principles." He also cited the huge amount of corporate losses from the corruption scandal as well as the fear Chung may destroy evidence as reasons for demanding the detention of the chairman.
The decision to seek the arrest of either the father or the son was made out of concern that the arrest of both Chungs might cause a management crisis within Hyundai, the prosecutor explained.
He indicated that physical detention of other Hyundai executives allegedly involved in the scandal would be minimized to prevent the country's second-largest conglomerate from experiencing a setback in business.
There have been mounting calls from the nation's business sector for leniency for the Chung family due to worries about the possible negative effect of the investigation on the nation's economy.
The senior Chung was released at dawn Tuesday after undergoing questioning by prosecutors for 15 hours. Chung denied most of the allegations raised against him, according to prosecutors. The younger Chung was grilled last week.
The investigation has already prompted the carmaking group to delay its overseas expansion plans.
Hyundai Motor Co. said Monday that it had put off a groundbreaking ceremony for its $1 billion plant in the Czech Republic. Last week, Kia Motors indefinitely postponed a similar event for its $1.2 billion U.S. plant.
Hyundai Motor and Kia Motors together control more than 75 percent of the South Korean automobile market.
There goes the ten year warranty.......
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