SOUTH KOREA: Ex-Govt Official Arrested in Hyundai Probe

A former government official was arrested on bribery charges, authorities said Thursday, as prosecutors stepped up a probe into where Hyundai Motor Co. used slush funds allegedly siphoned off from affiliates.

Byeon Yang-ho, 51, former head of the Finance and Economy Ministry's Financial Policy Bureau, is accused of accepting 200 million won, or $208,000, in bribes from a lobbyist for South Korea's largest automaker, said Lee Jong-seok, a judge at the Seoul Central District Court.

Byeon allegedly received the money on three occasions between July 2001 and April 2002, when he was head of the ministry's powerful bureau, said the judge who issued the arrest warrant for him on Wednesday night.

Neither the judge nor prosecution spokesman Kang Chan-woo disclosed what Byeon may have done for Hyundai. South Korean media, including Yonhap news agency, said he is suspected of influencing some of Hyundai's creditor banks to cut debts of two Hyundai affiliates.

Byeon has reportedly denied the charges.

Prosecutors have been investigating Hyundai for months over suspicions that the company created a huge amount of slush funds to buy influence with government officials.

When arresting Hyundai Motor Chairman Chung Mong-koo in April, prosecutors said the tycoon played a leading role in creating a 103.4 billion won ($108 million) fund by embezzling money from affiliates.

The trial of Chung, 68, began early this month.

Prosecutors have arrested two lobbyists on charges of receiving money from Hyundai in exchange for promises to help it win construction approvals and permits, and other business favors. But it has largely remained unclear where the slush funds went.

On Wednesday, Chung sent a letter to the court deliberating the case, in which he offered an apology and expressed willingness to ''take legal responsibility.''

''I sincerely apologize for creating and using slush funds,'' Chung said in the letter, a copy of which was provided Thursday by Hyundai. ''I will also gladly take legal responsibility. I will take (this case) as an indelible lesson for the rest of my life.''

Chung insisted in the letter, however, that although Hyundai executives reported to him on the need to create slush funds, he left the matter to their discretion. Still, he added he feels ''responsibility'' as CEO of the company.

The Seoul Central District Court confirmed that it received the letter. Kim Jae-jin, one of Chung's lawyers, said that the Hyundai chief sent the letter without consulting his legal team. Kim added that he couldn't comment on the letter's significance for the case.

The scandal has been gripping Hyundai and its affiliate Kia Motors Corp., South Korea's second-largest automaker and headed by Chung's son, Eui-sun.

Since Chung's arrest, Hyundai Motor and Kia Motors indefinitely postponed groundbreaking ceremonies for the construction of new plants in the Czech Republic and the United States.

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