Hyundai Chairman Accused of Embezzling April 29, 2006
Prosecutors said Chung Mong Koo had set up a $105 million slush fund to bribe officials and politicians.
Prosecutors said the chairman, Chung Mong Koo, 68, who led the company’s global expansion and raised its image by emphasizing quality, had set up a $105 million slush fund to bribe government officials and politicians. He is also facing a charge of breach of trust, accused of causing more than $315 million in damage to the company through his misconduct.
Prosecutors portrayed the arrest as a testament to the commitment of regulators to crack down on corruption in the country’s family-controlled business groups.
In a late-night broadcast live on national television, Mr. Chung, flanked by prosecutors, emerged from the Supreme Prosecutors’ Office to be taken to a jail near Seoul.
Facing a crowd of television crews and photographers, he bowed slightly but did not say a word. He was arrested immediately after the Seoul Central District Court granted the arrest warrant Friday evening.
“The accused keeps denying the charges and, therefore, there is the possibility of the accused trying to go into hiding or destroying evidence,” a senior district court judge, Lee Jong Seok, told reporters.
The arrest capped a monthlong investigation into Hyundai and companies affiliated with the family-controlled conglomerate, South Korea’s second-largest after Samsung. It focused renewed attention on the power of the country’s conglomerates, known as chaebol, and their ties with government officials and politicians.
In Hyundai’s case, prosecutors have said that senior executives used the slush fund to bribe government officials and politicians. They also contend that Mr. Chung acted illegally to transfer assets to his son, Chung Eui Sun, 35, president of Kia Motors, which is part of Hyundai.
The battle to arrest Mr. Chung was closely monitored by industry analysts and ordinary South Koreans as a power struggle between state regulators and the conglomerate.
During the hearing, Mr. Chung’s lawyers said his arrest would hurt the South Korean auto industry by depriving Hyundai of a charismatic leader credited with building the company and its affiliate, Kia Motors, into a global competitor.
But prosecutors said his incarceration would send a strong warning against corruption.
As the investigation unfolded in the last month, the Chungs apologized to the public and announced that they would donate $1.1 billion in personal assets to charity.
The move came after a similar one by Samsung. Last year, audiotapes emerged revealing Samsung executives giving illegal donations during the 1997 presidential election. The conglomerate’s chairman, Lee Kun Hee, left South Korea for the United States for several months until he was cleared of wrongdoing. Immediately after Mr. Lee returned here and asked South Koreans for forgiveness, Samsung announced in February that it would donate $840 million to charity.
Like the Hyundai chairman, Lee Kun Hee was also under investigation for illegally trying to transfer the conglomerate’s control to his son, Lee Jae Yong.
- Posted in : Uncategorized, Hyundai
- Author : arnold
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