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Thursday, 30 January, 2003, 11:24 GMT
'Seoul paid for summit with North'
Children walk past a poster showing the historic meeting of South Korean President Kim Dae-jung and North Korean leader Kim Jong-il
The 2000 summit marked a breakthrough in relations
South Korean government investigators have said that $200m was secretly transferred from a state-controlled bank to North Korea one week before a landmark inter-Korean summit in June 2000.

This proves that this government's biggest achievement, the June 15 South-North summit, was bought with money

Park Jong-hee, opposition party spokesman
The summit was seen as a boost for outgoing President Kim Dae-jung's policy of engagement with the North, but critics have dismissed the historic meeting as cheque-book diplomacy.

The government investigators' report was the culmination of a three-month inquiry into loans granted to the South Korean conglomerate Hyundai.

Mr Kim, who has previously denied knowing about Hyundai's dealings with the North, appeared to acknowledge the report's findings on Thursday when his spokeswoman said that the money was justified "if (it) was spent on promoting South-North economic co-operation".

"The unique nature of South-North relations has forced me to make numerous tough decisions as the head of state," Park Sun-sook quoted him as saying.

Hyundai funding

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?
Sohn Sung-Tae, an official with South Korea's Board of Audit and Inspection which conducted the probe, said the 223.5bn won ($200m) was part of a loan from state-run Korean Development Bank (KDB) to a Hyundai subsidiary.

The BBC's Seoul correspondent says the investigation has been frustrated by the company, which had refused to submit financial documents.

But threatened with legal action, the company finally complied this week.

In its report, the Board of Audit and Inspection confirmed that the loans of nearly $400m to Hyundai Merchant Marine were extended one week before the historic inter-Korean summit, and that half of the amount was then transferred to the Communist State.

Opposition politicians have alleged that the money was used as a bribe to induce North Korea to take part in the summit.

The Hyundai group has funded numerous inter-Korean economic projects and has played a key role in nurturing better ties between South Korea and the isolated Communist North.

But it has been badly affected by a joint venture tourism project with North Korea, and, in deep financial trouble at the time of the summit, insisted it used the loan to improve its financial position.

South Korea's JoongAng Ilbo newspaper quoted an aide to President-elect Roh Moo-hyun on Thursday as saying that the Hyundai firm had transferred the money to the North with the help of the government's National Intelligence Service.

"This proves that this government's biggest achievement, the June 15 South-North summit, was bought with money," opposition party spokesman Park Jong-hee said in a statement.

Mr Park called on Mr Kim to apologise.

The legacy of outgoing President Kim Dae-jung's administration has been seen as his success in improving ties with the North.

He was awarded the Nobel Prize for Peace in 2000 following the inter-Korean summit.

See also:

26 Oct 01 | Business
20 Jun 01 | Asia-Pacific
10 Apr 01 | Asia-Pacific
13 Jun 00 | Asia-Pacific
24 Jan 03 | Asia-Pacific
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