$400 million loan tied to 2000 summit

Eight Hyundai group affiliates provided 450 billion won ($375 million) in assistance to their sister company, Hyundai Asan, which runs the Mount Geumgang tours, the Financial Supervisory Service and the Hyundai Group told a National Assembly hearing Thursday.

The admission contradicted a statement made a day earlier, when Hyundai affiliates denied providing any support to Hyundai Asan, after Grand National Party lawmakers alleged that the government sent $400 million to the North through Hyundai Asan in 2000 to secure that year's North-South summit.

Eom Ho-sung, a GNP lawmaker, said Wednesday that the state-run Korea Development Bank gave an emergency loan of $400 million in June 2000 to Hyundai Merchant Marine. Mr. Eom asserted that the money was transferred to Hyundai Asan and then to the North. The charge gained credibility when Uhm Rak-ryong, former governor of the Korea Development Bank, testified at the Assembly that the president of Hyundai Marine told him that the government should repay the loan since the company had not used the money.

The allegations, if confirmed, would deal a serious blow to both President Kim Dae-jung and the Hyundai Group. The summit is the administration's greatest legacy, and Mr. Kim won a Nobel Peace Price in 2000 for creating a mood of rapprochement on the Korean Peninsula.

In February 1999, eight Hyundai affiliates, including Hyundai Marine and Hyundai Engineering and Construction, provided 100 billion won to help Hyundai Asan oversee North Korean projects, the Financial Supervisory Service reported to the Assembly Thursday. Hyundai affiliates further provided an additional 350 billion won to Asan over five occasions before May 2000. The financial watchdog said that most of the money was used to fund Hyundai Asan's North Korean project.

At the time, most of the Hyundai affiliates were having serious liquidity problems and did not have the cash flow to help Hyundai Asan. Creditors of Hyundai Marine collected 415 billion won in April-May 2000. To save Hyundai Marine, the holding company of the Hyundai Group, from going under, the Korea Development Bank in June 2000 gave it an emergency loan of 490 billion won ($400 million). The GNP lawmakers claim that this loan was handed over to the North.

Mr. Eom demanded that the Financial Supervisory Service trace the bank accounts of North Korean overseas companies. "North Korea's Asia Pacific Peace Committee operates paper companies in Beijing, Macao, Hong Kong and Singapore, and these companies likely channeled the $400 million to Pyeongyang," Mr. Eom said.

"President Kim must resign if the claims are confirmed," Mr. Eom said. The Blue House spokeswoman, Park Sun-sook, accused the opposition of "groundless accusations."

by Lee Sang-il