Evidence supports claims that S. Korea paid North for talks

Government auditors say $200 million missing from loan to Hyundai Group

January 31, 2003|By Barbara Demick | Barbara Demick,SPECIAL TO THE SUN

SEOUL, South Korea - South Korean government auditors released evidence yesterday supporting allegations that a nearly $200 million bribe was paid to secure North Korean leader Kim Jong Il's acquiescence to a landmark summit in Pyongyang with South Korean President Kim Dae Jung.

The revelation in what has come to be known as the cash-for-summit scandal threatened to undermine the legacy of South Korea's Kim, who won a Nobel Peace Prize after the June 2000 summit, and to erode relations between North and South.

"If it is exposed that the historic summit was bought and paid for, that would be a very serious matter for Koreans and for the world," said Lee Bu Young, an assemblyman with South Korea's conservative opposition party, which is calling for a special prosecutor to investigate further.

In the report released yesterday, the South's Board of Audit and Inspection confirmed the long-standing allegation that nearly $200 million of a corporate loan from a government-run bank was unaccounted for and most likely had gone to North Korea.

The secret loan was made eight days before the summit to Hyundai Merchant Marine, a subsidiary of the giant Hyundai Group, which has worked closely with South Korea's Kim on various reconciliation projects.

Hyundai and the South Korean president have denied the allegations of a bribe.

The board said that it did not have evidence that a crime was committed but that it would refer its findings to prosecutors if it is asked. Earlier this week, prosecutors barred 15 businesspeople and government figures involved in the case from leaving the country.

South Korea's Kim released a statement yesterday in which he called for an end to the criminal probe for the sake of peace.

"If the money was spent on promoting South-North economic cooperation, for the sake of the national interest it is not desirable to make it a subject of judicial inquiry," Kim was quoted as saying by spokeswoman Park Sun Sook. "The unique nature of South-North relations has forced me to make numerous tough decisions as the head of state, and I always put the interests of our people and nation at the forefront."

Criminal charges against Hyundai could jeopardize the two major projects that are cornerstones of Kim's highly acclaimed "sunshine policy" toward North Korea. Hyundai is the major developer of a $5 billion industrial park proposed in the North Korean city of Kaesong near the demilitarized zone between the two countries, and it also runs guided tours that take South Korean tourists to a scenic mountain range in the North.

The latest revelations are also likely to fuel demands by South Korean conservatives to stop dealings with the North, especially given the Pyongyang regime's decision to restart its nuclear program.

"This proves that this government's biggest achievement, the June 15 South-North summit, was bought with money," opposition party spokesman Park Jong Hee said in a statement. "President Kim must explain before the public the suspicion about a behind-the-scenes deal."

South Korean conservatives long have charged that North Korea's Kim has demanded cash and supplies from South Korea in return for superficial diplomatic gains.

Barbara Demick is a reporter for the Los Angeles Times, a Tribune Publishing newspaper.

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