Summit scandal rocks S. Korea

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.

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.

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