Summit scandal rocks S. Korea

An investigation into an alleged $500 million payoff to North Korea is expected to begin next month.

What started as a rumor last fall has turned into one of the most significant criminal cases in South Korean history.

This week, President Roh Moo-hyun gave a reluctant nod for a special counsel to investigate whether former President Kim Dae Jung approved illegal transfers of $500 million or more to a shadowy North Korean bank account - known to be controlled by North Korean leader Kim Jong Il - to buy his participation in a historic June 2000 summit between the North and South.

Not only do the investigations threaten to blacken Kim Dae Jung's "Sunshine Policy" of engagement with North Korea, which won him a Nobel Prize, but fallout from the case could significantly alter the way the South deals with the North at a very sensitive time in relations between the two Koreas. It could also further widen already sharp political divisions in Seoul.

New President Roh - who strongly backs dialogue with and heavy investment in the North that Sunshine Policy advocates see as the way to create peace with the isolated military dictatorship of Kim Jong Il - could have vetoed the criminal investigation. But analysts say Mr. Roh took office last month on promises of impartiality and a willingness to conduct state affairs in an open and fair manner. Some argue that if the allegations prove true, Roh can distance himself from the previous administration in order to keep the policy alive.

$3 billion in transfers?

The scandal broke last fall after government auditors found that some $200 million in unreported funds was sent by the Korean conglomerate Hyundai Group to a North Korean bank account just prior to the 2000 summit, when Kim Dae Jung traveled to Pyongyang in the first state meeting between the two Koreas in 50 years.

Parliamentarians from the opposition Grand National Party here say the actual amount of funds transferred over the past five years could be as high as $3 billion - and that the money was used to fund North Korean military purchases, Kim Jong Il's family, and North spy networks in the South.

Roh has been under heavy pressure by officials who want to protect former President Kim, as well as by some in his own circle of advisers, who point out that Kim Jong Il has threatened to "freeze" inter-Korean relations if any investigation is conducted into secret money transfers to his accounts.

Bowing to those pressures, Roh agreed to a limited 100-day time period for the probe, expected to begin in mid-April. Also, negotiations are under way this week over the scope and conduct of the prosecutors. For example, media in South Korea may print the name of the Macao-based North Korean firm, Cho Kwang Trading Co., and its chief, Baek Ja Pyung - whose Hong Kong bank account numbers are said to have received the funds. Yet official reports and hearings related to the investigation may not use those names.

The scandal could not have come at a worse time for those who advocate engagement with the North. Kim Jong Il is in a nuclear standoff with the US. In October, North officials admitted to a US envoy of having a secret uranium-enrichment program. The North later kicked out UN inspectors and started up the Yongbyon plutonium nuclear reactor - part of a series of threats and provocations that have thrown the peninsula into a security crisis. So far, Kim has been careful to focus on the US as his principal target of antipathy, while appealing to those in the South who question the US military presence here.

In fact, a central result of the Sunshine Policy in the past five years has been a growing feeling among leftists and the younger generation in the South that Kim Jong Il is not a benighted or "evil" figure, that he is misunderstood, and that he can be worked with to create the long-desired outcome of Korean unity on the peninsula.

Older South Koreans and rightists disagree. They say Mr. Kim is simply using the good intentions of the South to obtain much-needed cash in order to finance his impoverished regime, and that he isn't willing to open his country to the outside world since that would weaken his grip on power.

Moreover, if it appears that the summit was essentially "bought," a summit that was presented in Seoul as a major emotional change of heart by the North, that could undercut Kim Jong Il's recent support in the South.

"If it is revealed that Kim Jong Il received the money, that will do great damage to the image of Kim Jong Il, and he absolutely doesn't want that," one Seoul analyst argues. "If it is shown that the summit was bought, that will be a powerful argument against the current engagement policy."

Irregularities admitted

Investigations and hearings next month are likely to center on Kim Dae Jung's chief of staff, his intelligence chief, and the head of Korea's state banking system - all of whom are allegedly part of a transfer of funds in the spring of 2000.

A special report published yesterday by the conservative magazine Monthly Ilbo charges that the Hyundai Group worked with South Korean officials to send a partial payment of $100 million to Baek Ja Byong's Bank of China account, via a Hong Kong foreign-exchange bank, a month before the 2000 summit - and that Mr. Baek's telephone confirmation of receiving the money was caught in a phone intercept by South Korean intelligence.

The Cho Kwang Trading Co. is widely regarded to be a front for "Room 35," the nickname given to the North Korean secret service overseas branch. The company is described as involved in money laundering and forgery, is allegedly involved in kidnapping and special operations, and is a center for research into South Korean attitudes about the North. The firm allegedly laundered the large South Korean payoffs through a joint casino operation that has branches in Macao and atop the highest hotel in Pyongyang.

Before leaving office last month, Kim Dae Jung admitted to irregularities in the handling of funds proffered to North Korea in what he called a public apology. But he says the transfers were part of a business deal, not a payoff for a summit meeting. Kim chose Roh as his successor last spring. Since Roh's decision to allow an investigation, Kim has made no public comment.

About these ads
Sponsored Content by LockerDome

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...

Save for later

Save
Cancel

Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items

OK

Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items

OK

Failed to save

You have already saved this item.

View Saved Items

OK