S. Korea Indicts 10 in Bribery Probe; No High-Ranking Politicians Named

South Korean prosecutors today announced the indictment of 10 people--but no high-ranking political figures--in a bribery investigation that has been widely denounced here as a whitewash.

President Kim Young Sam’s son Kim Hyon Chol, a major target of allegations, was not expected to be questioned as a suspect in connection with the investigation of the Hanbo Group. The conglomerate, Korea’s 14th largest, received more than $5.8 billion in questionable loans over the last five years for its flagship Hanbo Iron & Steel Co., which was drowning in debt and eventually declared bankruptcy last month.

But prosecutors have said they may question Kim Hyon Chol because he filed a separate, criminal libel complaint on Tuesday against six opposition legislators for asserting that he was the hidden power broker in arranging the Hanbo loans.

Ten people have been arrested: Hanbo founder Chung Tai Soo and his financial aide, two credit bankers, a former bank president, a former home minister and four ruling and opposition lawmakers. They are accused of participating in a scheme to bail out the ailing steel firm--Korea’s second largest--with loans totaling more than 20 times its net worth, in exchange for bribes.

The bankruptcy, the worst financial scandal during Kim’s four years in office, triggered speculation about high-level political corruption after media reports that the astronomical loans were made in apparent violation of lending limit rules and against the recommendations of banking staff members.

The president, who has denied all wrongdoing, vowed to launch an investigation so thorough “as not to leave one speck of suspicion.”

But after authorities arrested Hong In Kil, a ruling party member and a longtime ally of the president, Hong publicly characterized himself as an insignificant “feather” and said the body of the rotten bird remained hidden.

The metaphor was widely picked up, with even the conservative Chosun Ilbo newspaper criticizing the investigation. In an article last week, the newspaper declared: “Only feathers have been arrested. There has been no willingness to investigate the body itself. [Prosecutors] are making it clear they have no intention to investigate Kim Hyon Chol.”

Among other things, the newspaper questioned why Cho Heung Bank and Korea Exchange Bank made loans over the advice of their working staff; why prosecutors failed to trace bank accounts; and why few bureaucrats were questioned about the licensing and oversight of the ambitious conglomerate, which rapidly expanded into steel, energy and construction over the past few years.

“Most people--99%--will say this is a cover-up,” Chaibong Hahm, a Yonsei University political science professor, said of the investigation. “There’s a huge expectation that there was one evil person in the back controlling everything. People are bloodthirsty.”

In a survey by a civic group published today in the Seoul-based Korea Times, 74% of 706 respondents said prosecutors had not uncovered the truth behind the scandal, and 81% supported a special prosecutor to conduct an impartial investigation. More than half of those polled said they believed that politicians had not been sufficiently investigated, and 16% said Kim Hyon Chol had been overlooked.

The younger Kim has declined a request by The Times for an interview. But in interviews with Korean media, he has denied wrongdoing.

His name surfaced in South Korean media almost immediately after the Hanbo scandal broke last month; this nation’s leading dailies carried accusations that he had deep ties to the conglomerate and the kind of political clout needed to arm-twist bankers into making the loans.

Kim, who bears a striking resemblance to his father, was born in 1959 and officially serves as chairman of the United Nations Youth League. But he began helping his father in politics during the elder man’s unsuccessful 1987 presidential campaign; in the 1992 campaign, he began serving as a “mediator” to help resolve complaints and conflicts among political supporters, according to the younger Kim’s 1995 book of essays, “Tales I Want to Tell, Tales I Want to Hear.”

The role landed him in controversy, he writes, including allegations that he received more than $115,000 in political donations from an herbal medicine dealer--through a lawyer--to lobby for the industry. Kim says he never took any money, and has won a libel suit against the herb dealer and the Hankyoreh newspaper in lower court rulings now being appealed.

The younger Kim says he made a general promise to the herb dealers to help them if they aided his father in the election. “When things did not work out as they wanted, they caused trouble,” he wrote.

In the Hanbo scandal, Kim initially said he had met the conglomerate’s chairman only once, briefly, at a university reception.

But Han Young Ae, a legislator from the National Congress for New Politics--the country’s main opposition party--has told South Korean media and said in an interview that two informers have told her Kim made at least two visits to one of the firm’s steel mills. That assertion provoked the president’s son to include her as one of the six defendants in his libel suit filed Tuesday.

In an interview, Han also said prosecutors cannot account for the entire amount lent to Hanbo and quoted one of the informants as saying some of the money had already been passed to ruling party campaign coffers in preparation for this year’s presidential election.

The recent discovery in a Hanbo warehouse of 10,000 copies of Kim’s 1995 “Tales” book raised further questions about his connections to the conglomerate.

In the book, Kim, who earned a master’s degree in business administration at USC in 1987, details his life as the second son of Korea’s first civilian president in more than three decades. He calls himself an “ordinary citizen” who shuns more money than is needed for the “basics” in life. “

Choi Jang Jip, a Korea University political science professor, said the widespread perception that the president has shielded his inner circle from a thorough bribery investigation will destroy the legacy he has sought to build as a fearless corruption fighter.

In four years, Kim jailed more than 1,000 officials for corruption, enacted new laws on financial disclosure and political reform and sent two former presidents--Roh Tae Woo and Chun Doo Hwan--to prison for corruption in amassing a $653-million slush fund.

“This is almost a deadly blow to President Kim’s image as a clean president,” Choi said.

Chi Jung Nam of The Times’ Seoul Bureau contributed to this report.