South Korean Corruption Probe Widens

In a widening corruption probe, prosecutors said Tuesday that they will question eight more South Korean politicians about whether they helped arrange bank loans to overextended Hanbo Iron & Steel Co. in exchange for political donations.

However, the jailed former president of Seoul Bank testified before the parliamentary committee investigating the scandal that there was no outside pressure on his institution to offer credit to Hanbo.

On Monday, Chung Tai Soo, chairman of the parent Hanbo Group, said his staff had paid three leading politicians--including one of the nine candidates for this coming December’s presidential election--but he then recanted his testimony. On Tuesday, Kim Jong Kuk, Hanbo Group’s finance director, did not deny accusations that employees had forked over the cash.

“I can’t confirm it,” Kim said. “Please understand I am not in a position to say with confidence.”

Kim was evasive about reports that he delivered donations of between $112,000 and $337,000 to four other South Korean lawmakers on Chung’s behalf, but he did not deny them. None of the four had been implicated by prosecutors before; three are known to be close friends of President Kim Young Sam, having spent 10 years as fellow dissidents.

Four politicians, including a former Cabinet minister, have already been questioned about their Hanbo ties, and Tuesday’s announcement brought the number officially named by prosecutors to 12. Unconfirmed press reports have said there are at least 24 names on Chung’s list of beneficiaries.

Chung, known as “Mr. Lock” for his refusal to discuss his munificent political donations, has denied buying political influence to secure loans for Hanbo Steel, his conglomerate’s flagship. But he did make legal contributions, he said, including a $1.1-million donation to President Kim’s party during the 1992 presidential election season.

Prosecutors, however, say Chung may have diverted up to $1 billion from Hanbo Steel for kickbacks and political payola. Hanbo Steel collapsed in January with debts of $5.8 billion.

Lawmakers on Tuesday voted to compel the 73-year-old Chung to testify again next month. They said Chung failed to give satisfactory answers Monday during nationally televised hearings held inside the Seoul Detention Center, where he is being held on corruption charges.

Polls showed nearly 95% of the South Korean public believed Chung was lying when he said he did not remember whether he had given money to any of about two dozen officials whom he is rumored to have paid off.

Former Seoul Bank President Sohn Yong Kyun told lawmakers Tuesday that when he was appointed president of the bank in February 1994, it had $236 million in outstanding loans to Hanbo Steel. Considering that exposure excessive, Sohn gradually decreased the amount of new loans, prompting Hanbo to switch to Korea First Bank as its major lender.