South Korean loan arrests hit close to presidency
Seoul — An uncle of President Chun Doo Hwan's wife was arrested on charges arising from a multimillion-dollar South Korean loan scandal. Former Gen. Lee Kyu Kwang faces five years in jail if convicted of accepting gifts while holding public office.
A former deputy chief of the Korean Central Intelligence Agency, Lee Chol Hi, and his wife, Chang Yong Ja, have been arrested on charges of fraud and foreign currency violations for allegedly pursuading the former general to use his influence to further their business interests, in return for $138,000 and a $414 ,000 house.
The loan scandal has led so far to the arrest of 18 people, including two bank and two company presidents. The allegations of fraud involving relatives close to the President's wife has embarrassed the presidency.
Lee Kyu Kwang, related to Mrs. Chang by marriage, resigned as president of the state-run Korea Mining Council when she admitted using his name to extract more than $275 million from six companies as collateral for loans worth only about a quarter as much. The deal led to millions of dollars being wiped off shares on the stock exchange and it almost bankrupted several companies.