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Feature: Korean summit scandal widens

By
JONG-HEON LEE, UPI Correspondent

SEOUL, June 19 (UPI) -- In 2000, Park Jie-won was South Korea's man of the year. As then President Kim Dae-jung's right-hand man, it was he who flew to Beijing and Singapore for secret contacts with his North Korean counterpart, and negotiated a landmark agreement to stage the first-ever inter-Korean summit.

Park was praised for his role as emissary in arranging the historic summit between Kim and North Korean President Kim Jong Il in June 2000. His efforts helped the South Korean president win the 2000 Nobel Peace Prize for promoting peace and reconciliation on the Korean peninsula.

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Three years later, however, Park is facing unexpected disgrace. On Thursday, he was taken to a jail outside Seoul on charges of bribery in the course of arranging the June 13-15 summit.

Park, the former presidential chief of staff and culture and tourism minister, is accused of taking $12.6 million in April 2000 from Hyundai, then the country's biggest conglomerate, in return for favors concerning its business projects in North Korea.

He is also accused of exercising his influence to push a state-run bank to provide a Hyundai subsidiary with loans worth $336 million, according to an independent counsel investigating allegations Kim bought the summit with the North. If convicted, Park could face up to 7 years in prison.

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Park received the alleged bribes from Hyundai in a hotel bar in Seoul two months before the summit. The money was "needed to prepare for the summit," the independent counsel said in a statement.

Lee Ik-chi, the former chairman of Hyundai Securities, testified, the statement says, that he changed $12.6 million worth of certificates issued by Hyundai Engineering & Construction into cash and delivered the money to Park. In return, Hyundai wanted business favors in opening a casino and a duty-free shop on cruise ships for its money-losing tourism project in a sealed-off mountain resort on the North's east coast.

The independent counsel is reportedly beginning to investigate another allegation that Park received $21 million from Hyundai. Park had long been accused of abusing Kim's trust and wielding power, being called a "little king."

Investigators said they were tracking the funds' final destination. Some suspect that part of the money was handed over to North Korea to persuade its leader, Kim Jong Il, to receive the South Korean president for a summit in Pyongyang.

The summit was widely hailed as a breakthrough in a half-century of hostility on the divided Korean peninsula. Four months later, the Norwegian Nobel Committee announced Kim's selection as winner of the coveted Peace Prize, mainly citing the summit.

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Park's arrest marks a critical juncture for the counsel's investigation, which began in mid-April. The independent body is seeking to extend its 100-day investigation, which ends next week, to question former President Kim.

The conservative opposition party suggested that Kim and Park might have engineered Hyundai's secret transfer of $500 million to secure the summit.

"This proves the summit was bought with money," the Grand National Party said in a statement.

The counsel's investigation has already revealed that at least $450 million was sent to North Korea through Hyundai subsidiaries leading up to the summit. Kim's former economic adviser, Lee Ki-ho, and a former governor of the state-run Korea Development Bank have been arrested for their involvement in the "cash-for-summit" scandal.

Kim has acknowledged he approved Hyundai's money transfers to North Korea despite "legal problems" because, he said, they facilitated peace on the peninsula. Secret financial aid to North Korea is illegal under a strict anti-communist National Security Law that bans unauthorized contacts with the world's only Stalinist state.

In the face of mounting public anger, Kim offered a public apology for the payoff scandal in February, saying he allowed the money to be paid to North Korea though it violated existing law.

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Citing the "peculiarities" of the inter-Korean relationship, he said initiatives sometimes must be conducted "outside the framework of the law." But Kim said the cash payments were made as part of business deals between Hyundai and North Korea, insisting the money was not related to the summit talks.

The payoff scandal erupted after government auditors found Hyundai secretly transferred some $200 million, obtained from the Korean Development Bank, to North Korea shortly before the summit. They confirmed a complex money trail that funneled money through at least three banks in three countries using 71 checks.

Lee Hahn-koo, an opposition lawmaker, has said the Kim Dae-jung government provided $3.3 billion to North Korea over its five-year term, including $900 million in cash. Lee said the funds were being used to develop nuclear weapons.

A former intelligence officer, known only by his family name, Kim, has said the cash was used by North Korea to purchased key components for nuclear weapons, 40 Soviet-made MiG jets and a submarine from Kazakhstan.

Kim and Park denied any wrongdoing in connection with the payoff scandal, saying the government had not paid "a cent" to the North in exchange for the summit. In a recent interview with Seoul's national KBS-TV marking the third anniversary of the Korean summit, Kim denied again allegations that he had bought the summit.

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Some analysts defend Kim's position, saying the payment was the price of opening up the North's closed society and economy, and was therefore in South Korea's interest.

"The money transfer seems part of (Kim's) acts of governing to secure a lasting peace on the Korean peninsula," said Yoon Jong-bin, a Hanyang University professor. "The achievement the summit made should not be damaged by the allegation," he said.

But Jhe Sung-ho, a law professor at Chung Ang University, said, "the truce picture should be brought to light, and any illegal transaction cannot be justified."

Analysts say the result of the special investigation may lead to strained ties with North Korea. Pyongyang has warned it would freeze relations if the South took action over an alleged cash payoff.

"If it is confirmed to have bribed North Korea, our North Korea policy should be revised from top to bottom," Dong-a Ilbo newspaper said in an editorial.

The payoff scandal is also a burden on new President Roh Moo-hyun who took office in February for a 5-year term. Roh, the ruling party candidate, was elected after pledging to follow in Kim's footsteps by seeking inter-Korean reconciliation.

The two Koreas are still technically in a state of war, since their armed conflict ended in 1953 in an armistice rather than a peace treaty. Their border is the world's last Cold War frontier with nearly 2 million troops on both sides.

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