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S. Korean police raid bankrupt company offices
January 28, 1997
Web posted at: 11:35 a.m. EST (1635 GMT)SEOUL, South Korea (CNN) -- South Korean police raided the offices of bankrupt Hanbo Steel and its affiliates Tuesday, as prosecutors investigated a snowballing financial scandal.
Prosecutors also barred executives from Hanbo and its top creditors from leaving the country until the investigation is complete.
South Korean President Kim Young-sam on Monday ordered a probe into Hanbo's financial dealings, amid accusations from the opposition party that Hanbo could not have gone $6 billion in debt -- mostly from bank loans -- without the government's approval of those loans.
Two other Hanbo affiliates -- Hanbo Energy Co. and Sang-A Pharmaceutical Co. -- have also declared bankruptcy, and South Korea's stock market, particular banking and securities shares, lost ground.
The Hanbo group is South Korea's 14th largest conglomerate.
In addition to Hanbo's offices, police also raided the homes of Hanbo founder Chung Tae-soo and his four sons to look for "evidence for any financial irregularities," according to prosecutor Lee Chung-soo.
Hanbo's Chung helped bankroll the corrupt administration of former President Roh Tae-woo. He contributed millions to a slush fund raised by Roh, who is now serving a 17-year prison term for corruption and human rights violations.
The opposition on Tuesday said it feared a government cover- up in the case, but Kim's New Korea Party called the opposition's demand for an independent prosecutor unnecessary. Kim has ordered a parliamentary probe into the case.
Kim, already rocked by a month of strikes over a new labor law, canceled a trip to Europe planned for early March to devote his attention to the growing crisis.
Union leaders stopped three weeks of general strikes on January 18, and had called for once-a-week strikes until February 18 if the government does not repeal the law, which makes it easier for companies to fire employers.
But on Tuesday, the labor leaders canceled the once-a-week strikes to prepare for a nationwide walkout to begin on the February 18 deadline.
Seoul Bureau Chief Sohn Jie-Ae and Reuters contributed to this report.
Related stories:
- Bankruptcy scandal adds to S. Korean government woes - January 27, 1997
- S. Korean opposition rejects offer to debate labor law - January 22, 1997
- S. Korean president to send labor law back to parliament - January 21, 1997
- S. Korean president agrees to meet opposition leaders - January 20, 1997
- Students, police clash violently over S. Korea labor law - January 19, 1997
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