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10 indicted in S. Korean loan scandal
February 19, 1997
Web posted at: 12:30 p.m. EST (1730 GMT)From Seoul Bureau Chief Sohn Jie-Ae
SEOUL, South Korea (CNN) -- After a nearly month-long investigation, South Korean prosecutors have indicted 10 men on charges of bribery and corruption in connection with the collapse of Hanbo Steel.
Chief prosecutor Choi Byung-kuk said those indicted included three close aides of President Kim Young-sam, heads of leading banks and the founder of the Hanbo Group -- Chung Tae-soo.
Hanbo Steel collapsed under the weight of a $6 billion debt, much of it from loans for which Hanbo had put up only $105 million in collateral. Critics alleged government influence peddling, and Kim ordered an investigation.
"So far we've had a hard time finding truth behind the case that would clear up all suspicions," Choi said. "We had to rely mostly on Chung's testimony, and he has insisted he didn't have to bribe many government officials because bankers and politicians did the job."
Along with Chung, indictments have been handed down for:
- Kim Woo-suk, who resigned last week as home affairs minister;
- Hong In-kil and Hwang Byung-tai, members of parliament and key members of a faction that backed Kim Young-sam's rise to power;
- Chung Jae-chull, another lawmaker and the third highest ranking official of the ruling New Korea Party;
- Kwon Roh-kap, a top aide to opposition leader Kim Dae-jung;
- Bankers Rhee Chul-soo, Sheen Kwang-shik and Woo Chan-mok;
- Kim Jong-kook, former Hanbo company treasurer.
Ruling party chairman Lee Hong-koo, speaking before South Korea's National Assembly, said he regretted the indictments, but said a full investigation into the case was necessary.
Shortly after the prosecution's announcement, radical union members held a rally outside the National Assembly building, saying they didn't trust the prosecution's results.
Opposition members have already accused prosecutors of trying to wind up the case too quickly in order to avoid further embarrassment to the president.
"Prosecutors seem to have spent more time covering up the scandal than investigating," the National Congress for New Politics said in a statement.
The National Congress Party has accused Kim Hyun-chul, President Kim's second son, of playing a key role in brokering the loans to Hanbo. The younger Kim denied the accusations, and has filed a criminal libel lawsuit against the politicians who made the charges.
The prosecution contends that Chung bribed the politicians and bankers to get the massive loans despite Hanbo's precarious financial position. He is also accused of diverting millions of dollars from those loans to acquire new subsidiaries and for personal use.
Reuters contributed to this report.
Related stories:
- S. Korea to query president's son in loan scandal - February 18, 1997
- CNNfn: Hanbo scandal grows - February 5, 1997
- Korean businessman arrested in growing scandal - January 31, 1997
- S. Korean police raid bankrupt company offices - January 28, 1997
- Bankruptcy scandal adds to S. Korean government woes - January 27, 1997
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