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Former South Korean Bank Chief Arrested for Possible Bribery - 2003-05-24

South Korean prosecutors have arrested a former head of a large state run bank.

Lee Keun-young is facing charges of criminal negligence for allowing the Korea Development Bank, which he headed, to extend questionable loans to two arms of South Korea's Hyundai conglomerate.

An independent counsel is investigating whether the administration of former President Kim Dae-jung channeled that money through Hyundai to North Korea as a bribe. The bribe was allegedly a way of persuading the North Korean leader, Kim Jong Il, to attend the June 2000 summit with President Kim.

The case involves an estimated $400 million to $500 million that was wired to the North that month. The North-South summit was allegedly delayed for a day until the money was put into a North Korean bank account in Macao.

Ex-President Kim has admitted that his government approved Hyundai's money transfers, despite the "legal problems" they presented, because they facilitated peace on the Korean Peninsula. The summit was a major factor in Mr. Kim being awarded the Nobel Peace Prize. Mr. Kim's successor, President Roh Moo-hyun, was pressured by the opposition party to allow an independent counsel to investigate the payments. Mr. Lee's arrest is the first to result from the investigation.

It is illegal for South Koreans to give cash to North Korea without government approval. Hyundai concedes giving the money to Pyongyang prior to the 2000 summit, but says it was only to obtain business rights in the North for tourism, rail and industrial ventures.

The 2000 summit raised hope that North Korea might be coming out of its shell, but since then, it has resumed its hostile stance vis-ŕ-vis the rest of the world, with an alleged nuclear weapons program.

President Bush and Japanese Prime Minister Junichiro Koizumi touched on the situation during their summit Friday at Mr. Bush's Texas ranch. The American president said the U.S. and Japan would not tolerate nuclear weapons in North Korea, echoing a position Mr. Bush and South Korea's President Roh reached in Washington earlier this month.