Tycoon Charged in South Korean Political Scandal

The head of one of South Korea’s large business conglomerates, Hanbo Group Chairman Chung Tae Soo, was arrested Wednesday on charges of helping former President Roh Tae Woo launder a $653-million slush fund--the first business tycoon to be charged in the country’s spreading corruption scandal.

Chung’s arrest, and the issuance of an arrest warrant for a former corporate chieftain believed to be in hiding, may be the precursors to further indictments and arrests of top South Korean business leaders in the next few days.

Chung, who heads a steel, construction and pharmaceuticals conglomerate that grew rapidly during Roh’s term in office, was arrested for allegedly laundering $78.7 million for Roh. He had already been accused in an indictment Monday of giving Roh $13 million in bribes related to real estate purchases in Seoul, but he was not detained at that time--reportedly because he could not be found.

Authorities Wednesday also issued an arrest warrant for Pae Jong Yol, the former chairman of the Hanyang Group, a large conglomerate centered on the construction business. Pae, also accused of giving bribes of $13 million to Roh and of laundering slush-fund money, has been wanted for questioning since Nov. 7, but prosecutors have been unable to locate him.

Roh, jailed Nov. 16 on bribery charges, is believed to have amassed his huge cache of funds partly from bribes and partly by “forced donations” from at least 30 business tycoons. Prosecutors face a Tuesday deadline to either release Roh or indict him. They are widely expected to indict not only Roh but also additional top business leaders who have been questioned in the case.

“Those facing prosecution for their corrupt ties with Roh are seen to number more than 20,” the Korea Times said Wednesday.

Chung is accused of helping the former president convert borrowed-name bank accounts worth $78.7 million into accounts in Roh’s own name between September and October, 1993.

One of the anti-corruption measures instituted by current President Kim Young Sam early in his term was to require that all bank accounts be in their owners’ real names. This reform played a key role in flushing out Roh’s secret fund.

Chung was previously jailed in 1991 for giving bribes to win rezoning of sites planned for public housing so his company could build private developments. He resigned as Hanbo chairman and served six months in prison, but then resumed his post.

While it seems virtually certain that additional business leaders will be indicted, they will not necessarily be arrested and sent to jail.

Meanwhile in Kwangju, 175 miles south of Seoul, about 800 students clashed with police Wednesday in a protest demanding punishment for Roh and his immediate predecessor, former President Chun Doo Hwan, for their roles in a massacre in that city 15 years ago. The protesters, many wielding wooden staves, blocked one of Kwangju’s main roads and disrupted the city’s financial district. They were eventually dispersed with volleys of tear gas.

Students also clashed with police in Seoul on Wednesday near the homes of Roh and Chun. Several dozen were dragged away by police who broke up the protest.