Hyundai CEO In Trouble With South Korean Law Keepers

South Korea to indict Hyundai Motor CEO Monday May 17, 6:08 am ET

SEOUL, May 17, 2004; Reuters reported that South Korean prosecutors are set to indict the chief executive of the country's top car maker, Hyundai Motor Co, for political funding violations and negligence, a prosecution official said on Monday.

Hyundai Motor Group is one of a string of South Korean family-controlled conglomerates, known as "chaebol", being investigated over allegations they provided illegal campaign funds to political parties during the 2002 presidential campaign.

"Vice Chairman Kim (Dong-jin) will be indicted today," said Kook Min-soo, spokesman for the Supreme Public Prosecutors' Office. Kim is also vice chairman of Hyundai Motor Group, South Korea's third-largest conglomerate.

The porosecutor said Kim would be charged with violating campaign finance laws and managerial negligence.

A spokesman for Hyundai Motor Group declined to comment.

More than a dozen members of parliament have been detained and indicted for allegedly accepting funds from South Korea's major corporations.

Several aides to President Roh Moo-hyun, the winner of the December 2002, election, have also been indicted in the multi-million dollar illicit campaign fund scandal.

South Korea is also mounting a drive to reform management practices at the chaebol. The process has been closely watched by foreign investors, who partly blame these practices for the relatively low value of local stocks.

Chung Mong-koo, chairman of Hyundai Motor Group, who has also been under investigation, would not be charged, Kook said.

"Chairman Chung Mong-koo has been cleared of the allegations against him," Kook said.

The prosecution would not seek physical detention over the indictment, Kook said.

Kim, an engineer and professional manager in a corporate empire still dominated by the family of founder Chung Ju-yung, is accused of playing a key role in raising a slush fund to support politicians in the 2002 presidential race, prosecutors said.

The investigation of campaign financing law violation against the Hyundai Motor Group was close to being wrapped up, Kook said.

Shares in Hyundai Motor Co, the flagship company of the group, tumbled 8.67 percent to close at 39,000 won. The fall was linked to concerns that surging oil prices would encourage people to delay auto purchases or opt for smaller vehicles that consume less fuel, dealers said.

DaimlerChrysler AG said last week it planned to sell a $1 billion stake in Hyundai Motor, further scaling down the German-American company's ties with carmakers in Asia with the long-flagged sale..