Hyundai Chairman Arrested

Hyundai Chairman Arrested Amid Scandal
By KELLY OLSEN, AP Business Writer

Prosecutors on Friday arrested Hyundai Motor Co. Chairman Chung
Mong-koo in an embezzlement and slush fund scandal engulfing South
Korea's largest automaker, an official said.

Chung's arrest, announced by prosecution spokesman Kang Chan-woo, came
late Friday, after the Seoul District Court issued a warrant.

Prosecutors suspect the 68-year-old Chung of embezzling company funds
to create a slush fund and of causing damage to the company.

Chung emerged from the Supreme Prosecutors' Office in Seoul after his
arrest. He was escorted by what appeared to be two prosecution
officials, and they got into a waiting car for the journey to the Seoul
Detention Center, just outside the city.

He made no comment to reporters and photographers.

Seoul District Court Judge Lee Jong-seok said after deliberating all
day Friday, he decided to issue the warrant because of the "heavy"
nature of the allegations.

"The suspect is denying most of the charges and is feared to destroy
evidence," Lee said.

Kang said prosecutors will continue to investigate Chung during his
detention before issuing an indictment.

Under South Korean law, prosecutors can detain suspects after arrest
for a maximum of 20 days before indictment.

"Vice Chairman and CEO Kim Dong-jin will assume full responsibility and
operational control" for Hyundai Motor "a duty he shared with Chairman
Chung Mong-koo," company spokesman Oles Gadacz said after the arrest
warrant was issued, reading a statement.

"All local and overseas manufacturing, sales marketing and R&D
operations are unaffected by today's development and will continue
normal operations," Gadacz said.

Prosecutors suspect Chung of embezzling about $106 million in company
money to create a slush fund, and breach of trust for allegedly
incurring about $320 million in damages to the company, the prosecution
said Thursday when they requested the arrest warrant.

Hyundai, which relies on exports for about 60 percent of its overall
revenue, sold a record 2.53 million vehicles last year, up 11 percent
from 2004. Kia sold 1.27 million vehicles, up 13.9 percent.

Prosecutors have raided Hyundai and three of its affiliates - Kia,
logistics unit Glovis Co. and auto-parts maker Hyundai Autonet - and
questioned key officials.

Prosecutors say officials embezzled money from affiliates to create the
slush fund and used it, via at least two lobbyists, to seek favors from
the government.

The lobbyists have been arrested on charges of receiving money from
Hyundai in exchange for promises to help it win construction approvals
and permits, and other business favors.

It is unclear if the lobbyists bribed government officials. It is
illegal in South Korea to accept money in return for exercising
influence.

Chung spent about 15 hours at the Supreme Prosecutors' Office in Seoul
for questioning earlier this week. His son, Kia President Chung
Eui-sun, spent about 18 hours there last week.

http://news.yahoo.com/s/ap/20060428/ap_on_bi_ge/skorea_hyundai_probe

 

It's just a bump in the road. Nothing will likely come of it. I think SK's
entire government is corrupt, and some crooks will probably spring him.

 

It appears that he got busted for what has been regarded as standard
business practice in Korea for a long time. It's unlikely that anything
will come of it, though wouldn't it be fun if it was discovered that
it's all part of a plot by Honda and/or Toyota?