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North cash called ‘payoff’ by counsel

June 26,2003
The independent counsel’s office yesterday wrapped up its 70-day investigation into cash-for-summit allegations, concluding that the Kim Dae-jung administration and Hyundai Group sent North Korea $450 million in cash, and that those payments were related to the staging of the inter-Korean summit in June, 2000.
The counsel, Song Doo-hwan, said yesterday that during March and April 2000 meetings to arrange the summit, Hyundai agreed to pay $350 million won in cash and $50 million won in goods to North Korea to obtain “business rights” there. The administration, Mr. Song added, agreed to pay an additional $100 million won in cash to the North Korean regime. But the Kim administration had difficulty in coming up with that cash, and Park Jie-won, the president’s chief of staff, asked Hyundai to pay it. Hyundai accepted the administration’s request, and it sent a total of $450 million won in June, 2000, Mr. Song said.
Mr. Song said the money was not only for Hyundai’s obtaining business rights in the North but also a “payoff” to the North to hold the summit.
“The $450 million won was transferred to the North before the summit and the Kim administration was actively involved in the transfer,” Mr. Song said. “The administration did not seek citizens’ understanding and acted secretly, which means that there was no legitimacy in its transfer process. Therefore we conclude that the money was related to the holding of the summit.”
The report says that North and South Korean officials met for the first time on March 8, 2000, and they agreed on April 8 to a meeting of the two countries’ leaders that year. At those meetings, Hyundai agreed to make the cash transfer. To prepare the $450 million, Hyundai Group assessed Hyundai Merchant Marine $200 million, Hyundai Engineering and Construction $150 million, and Hyundai Electronics $100 million. Senior Kim administration officials, including Mr. Park and Lee Ki-ho, the presidential adviser for economic affairs, then asked the Korea Development Bank to make a 400 billion won ($359 million) loan to Hyundai Merchant Marine. The shipping company gave 223.5 billion won to the National Intelligence Service on June 9, 2000, which sent the money to North Korean bank accounts in Macao three days later. Hyundai’s shipping arm then wrote in its account books that it used the 223.5 billion won to buy ships.
Hyundai Engineering and Construction raised $150 million by selling due bills. The construction company then sent the money on June 9 to eight North Korean bank accounts in Singapore.
Hyundai Electronics sent its share, $100 million, to North Korean bank accounts in Austria and Singapore on June 9 and June 12.
The counsel yesterday indicted Mr. Park, saying that he illegally used his influence to press the Korea Development Bank to make irregular loans to Hyundai Merchant Marine. He was also indicted on a separate charge of collusion to violate the Inter-Korea Exchange and Cooperation Act, which sets out reporting and approval steps for any financial dealings with North Korea.
Lim Dong-won, the head of the National Intelligence Service in the Kim administration, was also indicted yesterday on charges of violating the foreign currency exchange law and the Inter-Korea Exchange and Cooperation Act.
Mr. Lim, the counsel said, was involved in planning the summit and his agency was involved in dispatching the funds to North Korea.
Chung Mong-hun was also indicted. He is the chairman of Hyundai Asan, the Hyundai Group’s arm responsible for North Korean projects. The charges were violations of the inter-Korean exchange law and accounting fraud in the company’s books.
The three men will stand trial beginning July 4 at the Seoul District Court.
The counsel let former President Kim Dae-jung off the hook, however, although he said that the Nobel Peace Prize winner was aware of the cash transfers to the North before the summit meeting.
Mr. Song added, “We did not investigate him because we found no circumstances in which he was involved in any illegal acts.”
The future course of the prosecution of the three men is uncertain, however, and attempts to convict them will be opposed vigorously on the basis of what the Kim administration called its “presidential prerogatives” in deciding on how to deal with North Korea.
Mr. Kim and his aides have argued that the cash transfers were essential to the success of the administration’s “sunshine policy” of engagement with the North, and that they regarded the payments as an investment in the peaceful future of the Korean peninsula.
Carrying the argument further, some defenders of the transactions argue that the figures indicted in the scandal received no personal gain from the transactions and are unlikely to be convicted.
That claim of presidential prerogative, however, is controversial. The opposition party says such claims are commonly used by leaders of less-developed countries to justify their actions, and that Korea should have passed the stage where there is no judicial or law-enforcement oversight of the president’s powers.
But that issue of presidential prerogative would also seem to require an investigation into the role in the affair of the former president, and that is something that even some of his political opponents hesitate over. In asking President Roh Moo-hyun to extend the counsel’s lifespan, a request the president rejected on Monday, Mr. Song specifically ruled out a probe into Mr. Kim’s role. Hammering out that legal reasoning could occupy Korea’s court system for some time to come.
Most observers said yesterday, however, that the counsel’s summary of its work clearly demonstrates that the $450 million in payments to North Korea were a bribe to buy the summit. They add that the $100 million that Seoul had agreed to send to the North was even more clearly a bribe than the vague characterizations of the Hyundai payments as an investment in the firm’s future business in the North. They said it appears that the Kim administration asked for Hyundai to pay the money under the name of “fees for economic cooperation” to dodge charges that the government directly bought the summit.


by Kang Joo-an


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