KDIC, KAMC Alleged to Raise Illegal Fund

A fresh allegation has emerged that Korea Deposit Insurance Corporation (KDIC) and Korea Asset Management Corporation (KAMC) raised a massive amount of illegal fund in the process of retrieving foreign loans.

Rep. Lee Seong-heon of the Grand National Party (GNP) said in a parliamentary investigation into the KAMC yesterday that he was tipped that 100 million dollar worth of illegal fund has been deposited in a Korean Bank in the US. He said, "A person who was involved in the retrieval gave me the information, and I am examining the information to ascertain whether the information is true."

Lee, however, did not mention who is the owner of the illegal fund.

Lee said "When the KDIC and the KAMC were in the process of selecting a subcontractor to retrieve foreign loans, Lee Hyeong-taek, niece of First Lady Lee Hee-ho, was an executive of the KDIC and his brother, Jeong-taek worked as an advisor of the selected subcontractor."

A source close to Rep. Lee said, "We are trying to find out whether relatives and friends of the First Lady were involved in the retrieval process."

Rep. Lee added that the chairman of another subcontractor is a relative of the First Lady`s close friend, who helped her a lot when she studied in the US." The allegation has been confirmed by the Dong-a Ilbo.

Rep. Lee also alleged that the two subcontractors were given special treatment when they were selected.

Meanwhile the KDIC, the KAMC and two subcontractors flatly denied the allegations raised by Rep. Lee, dismissing Lee`s allegations as groundless.

The First Lady`s friend, who chairs one of the two subcontractors said that he does not know the First Lady in person and has never been given a business favor.

Earlier the KAMC was warned by the Board of Audit and Inspection of Korea when it paid excessive amount of commission to subcontractors in October, 1999.

Kwang-Am Cheon Ki-Jeong Ko iam@donga.com koh@donga.com