12 in Trouble on Loans

Embezzlement Indictments Planned

State prosecutors investigating illegal loans at Dongbang and Daeshin mutual savings and finance companies decided Monday to indict Chung Hyun-joon, president of the now-defunct Korea Digital Line, Lee Kyung-ja, vice chairperson of Dongbang, and 10 others on embezzlement charges.

The illegal loans were believed to have been used to bribe government financial supervisors.

The prosecution said that it also plans to indict without detaining two individuals who opened bank accounts under false names on behalf of Mrs. Lee so that she could obtain illegal loans.

It also plans to ask the Financial Supervisory Service to come up with appropriate punishment for those officials at the financial watchdog who overlooked illegal business practices at Daeshin Mutual Savings and Finance and Yuil Semiconductor in return for bribes.

The prosecution plans to conduct further investigation of Kim Young-jae, a deputy chairman of the Financial Supervisory Service, and Lee Yoon-kyu, a Blue House janitor who allegedly received bribes from Mr. Chung.

A prosecution official hinted that the agency intends to wrap up the investigation by concluding that the scandal resulted from Mr. Chung's desire to expand his business by pooling funds illegally from the private money market and that in the process, a few government financial supervisors accepted bribes from Mr. Chung and his accomplices.

In particular, the prosecution said that it flatly rejected the allegation that Kwon Roh-kap, a senior ruling party official, and other prominent politicians were implicated in the bribery scheme. It reasoned that it could not rely on Mr. Chung's testimony alone.

While the prosecution identified 653 individuals who put money into Mr. Chung's private funds, it decided not to act against them since, officials reported, there are no indications that they provided favors to Mr. Chung in return for their investment.

As for Mr. Kim of the Financial Supervisory Service, there is a disagreement within the prosecution whether it had sufficient reasons to indict him, officials indicated.

Mrs. Lee of Dongbang testified to the prosecution that she gave 500 million won($454,500) in two separate briefcases through Oh Ki-joon, president of Shinyang Factoring and a close associate of Mrs. Lee, to be passed on to Mr. Kim.

Discussing Mr. Lee of the Blue House, the prosecution said he invested 690 million won of his relatives' money in Mr. Chung's private funds.

by Chae Byung-gun