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 Friday, 24 January, 2003, 14:06 GMT
N Korea funding scandal investigated
Hyundai Cruise Ship
The company involved runs ferry tours to North Korea
One of South Korea's leading businessmen has been barred from leaving the country, after his firm was accused of illegally diverting $400m to North Korea.

This decision does not mean that they were specifically implicated in the case

Assistant prosecutor Park Young-soo
State prosecutors said they had ordered Chung Mong-hun - an influential figure in the Hyundai conglomerate - to stay in the country pending further investigations.

Mr Chung, the fifth son of the late founder of the Hyundai group, is among 15 people connected with the company to be subject to the order.

"This decision does not mean that they were specifically implicated in the case," assistant prosecutor Park Young-soo told local media. "We need them for the investigation."

Hyundai, which has played a key role in improving ties between the two Koreas, denies any wrongdoing and says it will submit information to government auditors next week to prove its case.

Historic summit

Auditors have been investigating Hyundai's accounts for months, after South Korea's main opposition party claimed the company passed government-supplied money to the communist North.

South Korean President Kim Dae-Jung, right, is embraced by North Korean leader Kim Jong-iI
Did the money facilitate the 2000 inter-Korean summit?
The Grand National Party said the money may have been given to facilitate a historic summit in 2000 between North Korea's leader Kim Jong-il and the South Korean President Kim Dae-Jung.

Although the Seoul government denies the payments, the matter has become a major political issue in South Korea.

The state-owned Korea Development Bank lent the money to Hyundai Merchant Marine, a key subsidiary of Hyundai group, days before the inter-Korean summit.

The company, which was in deep financial trouble at the time, insists it used the loan to improve its financial position.

Hyundai's finances were badly affected by a joint venture tourism project with North Korea.

The company has played a key role in nurturing better ties between South Korea and the isolated communist North.

It introduced the first ferry tours to North Korea in late 1998.

See also:

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