The presidents of two leading South Korean banks were arrested Wednesday on charges they took bribes in exchange for loans to a now-bankrupt steel company.
Shin Kwang Shik of Korea First Bank and Woo Chan Mok of Chohung Bank received $470,000 each in bribes in exchange for loans to Hanbo, the country’s second-largest steel firm, prosecutors alleged.
The Hanbo group’s flagship, Hanbo Iron & Steel Co., collapsed Jan. 23 under $6 billion in debt, mostly in bank loans. Three other Hanbo subsidiaries have also gone under.
Critics allege that the steel firm, with $105 million in capital, could not have received such big loans without help from corrupt government officials and politicians.
The founder and chairman of Hanbo, Chung Tai Soo, was arrested earlier on bribery charges. News reports said he gave prosecutors a list of politicians he bribed.
A key aide to opposition presidential hopeful Kim Dae Jung said he received about $188,000 in cash from Hanbo but called it a legitimate political contribution.
Kwon Ro Gap, aide to Kim and a deputy leader of the National Congress for New Politics, was the first politician to admit receiving money from Hanbo. Prosecutors said they will summon Kwon for questioning.