Hyundai chairman to be questioned in S. Korean bribery scandal

(CBC) - South Korean prosecutors have summoned Hyundai Motor Co. chairman Chung Mong-koo for questioning about a slush fund scandal that is engulfing the country's largest carmaker.

Chung is to appear before Korea's supreme prosecutor Monday morning, according to the prosecutor's spokesman. He refused to discuss details.

There was no immediate comment from Hyundai.

Prosecutors have been investigating Hyundai Motor over allegations that it embezzled money from affiliates. The money allegedly went into a slush fund that was used to bribe government officials.

Chung had flown to Los Angeles on Sunday, but he returned to South Korea after police reportedly slapped a travel ban on his son, Chung Eui-sun, the president of Hyundai-affiliated Kia Motors Corp.

Over the past month, prosecutors have raided offices of Hyundai and its three affiliates, Kia Motors, logistics unit Glovis Co. and auto parts maker Hyundai Autonet, questioning key officials.

The prosecutors' probe grew out of a scandal surrounding Kim Jae-rok, a lobbyist who was arrested last month on charges of receiving money from businesses in exchange for promises he would use his connections to win favors.

Prosecutors claim Hyundai paid Kim billions of won (millions of dollars) from slush funds to gain his help in winning construction approvals and permits.

Prosecutors have already questioned two other top Hyundai executives, as well as a former deputy governor of the state-run Korea Development Bank.

Meanwhile, Kia has indefinitely postponed a groundbreaking ceremony for its first U.S. manufacturing plant. That plant would have created 5,500 jobs in West Point, Ga., starting in 2009.

Hyundai Motor has a U.S. factory in neighbouring Alabama. It used to have a plant east of Montreal.

© the CBC, 2006