Independent Counsel Grills Hyundai Employees for Political Connections in Loaning

Independent Counsel Song Doo-hwan plans to subpoena for questioning Lee Geun-young (former chairman of Korea Industrial Bank), Um Nak-yong (also, former chairman) and Park Sang-bae (former vice chairman of KIB) some time this week. They are the key figures in the Kim Dae Jung administration`s secret checkbook diplomacy scandal. They are believed to have direct knowledge about the loan made out to Hyundai Marine Merchant, which was deemed wired to the North Korean regime later.

A member of the independent counsel team confirmed yesterday, "We will wrap up our investigation of the scandal related to Korea Industrial Bank," indicating the individuals will be subpoenaed soon.

Independent counsel Song wants to know why former chairman Lee and director Park broke the government regulations and gave an additional loan in the amount of 400 billion to Hyundai. If it is discovered they got involved in illegal activities, the counsel is likely to bring a formal indictment against them.

The Act on Korea Industrial Bank provides, in relevant part, "A line of credit shall not be granted to an affiliate/subsidiary of a group in excess of a quarter of its asset." But, prior to the loan at issue, Hyundai affiliates have received loans exceeding 31% of their total asset. Therefore, the 400-billion loan was legally impossible.

Independent counsel Song will also examine the truthfulness of former chairman Um`s congressional testimony. Last October, Um, at a congressional hearing, stated, "Then chief of staff Han Kwang-ok strongly pressured then chairman Lee into giving the 400-billion loan to Hyundai."

As a preliminary measure, Song called in former KIB vice chairman Chung Chul-cho and former director Oh Gyu-won as material witnesses for questioning yesterday.

Former director Oh was also examined yesterday to find out whether the loan was made out under political pressure and exactly how the Hyundai got to acquire the loan.

As soon as the investigation of the former KIB employees is over, hopefully by this end of this week, the independent counsel will launch another probe into the Hyundai affiliates.

In the meanwhile, the independent counsel office has notified that the loan application bore the forged signature of then Hyundai president Kim Choong-sik. Thus, it is also considering various measures to question former president Kim, who is now staying in the United States.

A source familiar with the case confirmed, "I can`t tell anything for sure, for now. But, we are second-handily receiving a message from Kim that he would cooperate with the investigation," implying that the counsel office is working on Kim`s voluntary returning from the U.S.

Former president Kim has holed up in L.A. without any contact with the press. But he has retained an attorney in preparation for the possible independent counsel investigation.

leon@donga.com jaykim@donga.com