S. Korea Steel Giant’s Chairman Held in Loan Scandal

South Korean prosecutors Friday arrested the chairman of the stricken Hanbo Group whose steelmaking flagship collapsed in January, a prosecution official said.

Chung Bo Keun was taken into custody after being questioned, the official said.

Prosecutors have accused Chung of pocketing about $41 million from Hanbo Group funds. Hanbo is South Korea’s 14th-largest industrial conglomerate.

Chung’s father, Hanbo founder Chung Tai Soo, is already on trial along with nine other people in connection with a Hanbo loans scandal that has rocked the nation. He is in custody at a Seoul prison.

Prosecutors reopened their probe into the Hanbo scandal last week after the opposition criticized an earlier investigation for failing to bring major players to justice.

Prosecutors said they would seize the Chung family’s assets to “end the bad practice of the past when businessmen survived even when their businesses collapsed.”

On Thursday, prosecutors said they had so far uncovered family assets of $385 million, which would be seized because of evidence that the family had evaded taxes of $485 million.

Hanbo Iron & Steel’s failure revealed a web of corruption and influence-peddling involving bankers and politicians that allowed the company to secure loans far exceeding its capability to repay them.

Opposition leader Kim Dae Jung on Friday proposed a meeting with President Kim Young Sam, who heads the New Korea Party, and leaders of other parties to discuss economic problems created by the Hanbo collapse.

“The leaders need to discuss ways to counter current economic problems,” the opposition leader told a news conference.

“This is the tragedy of a government-controlled financial system,” he said.

The president immediately responded by agreeing to hold the meeting Tuesday.

“The focus will be on stabilizing the economy,” a presidential aide said.

“Prosecutors and parliament should be left to disclose the truth of the Hanbo case.”