Seoul Links Chun’s Brother to $8-Million Embezzlement Case

Prosecutors said Friday that there is growing evidence that the younger brother of former President Chun Doo Hwan misappropriated millions of dollars from a community development organization.

Prosecutor Kang Won Il said officials have seized secret ledgers showing how Chun’s brother, Chun Kyung Hwan, and other top officials of the semi-official Saemaul Undong (New Community Movement) diverted funds.

“Considerable progress has been made in the prosecution investigation on Chun’s alleged embezzlement and receiving of money through influence peddling,” he said.

The Korea Broadcasting System, the state-run television network, and leading newspapers reported that the younger Chun will be arrested, possibly this weekend. Prosecutors declined to confirm the reports.

Prime Minister Lee Hyun Jae said there will be a full investigation.

“The current investigation reflects the new government’s determination to realize a clean government,” he said.

The investigation, announced earlier this week, centers on charges that the younger Chun, who was named to head Saemaul Undong while his brother was South Korea’s president, embezzled $8 million under a false name to invest in stocks, according to Kang.

Investigators located bank accounts in the name of Chun Kyung Hwan’s wife and other relatives in which large sums of money were found, officials said.

Chun Kyung Hwan resigned his post in 1987 after being linked to gangsters.

Saemaul Undong was set up in 1971 to organize rural and urban development and modernization. It is a huge organization involved in activities ranging from constructing model communities to urban clean-up campaigns.

Former President Chun, who has not been implicated by the probe, decided to cut short a tour of the United States and return to South Korea, officials said. Chun met with President Reagan in Washington on Wednesday.

The new government of President Roh Tae Woo, who took over from Chun on Feb. 25, is thought to be pressing the Saemaul Undong probe to discredit the former president by exposing corruption by his relatives. Roh has been trying to block Chun’s attempts to retain power within the administration.