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South Korea accused of 'buying' peace talks

| Friday, Jan. 31, 2003

SEOUL, South Korea — South Korea's main opposition party Thursday asked President Kim Dae-jung to clear up suspicions that his government had spent nearly $200 million to "buy" its crowning achievement — a historic summit with North Korea that helped Kim win the Nobel Peace Prize.

Allegations of payoffs to North Korea first arose last year but grew more substantial with media reports that a subsidiary of the Hyundai business group sent funds to North Korea about a week before the summit.

Government auditors yesterday confirmed that Hyundai — closely tied to Kim's policy of rapprochement with North Korea — borrowed $186 million from a government-run bank shortly before the summit and used it for unclear purposes in North Korea.

"We could not find out for what specific projects Hyundai used the money," Sohn Seung-tae, deputy director of the audit agency, said of its investigation. "Hyundai failed to provide data."

The heightened scandal hits Kim's presidency in its final days, casting doubt on his success with North Korea just as his latest, and last, diplomatic project — to find a peaceful solution to the furor over the communist nation's nuclear-weapons program — made little progress.

Two South Korean envoys to the North, representing Kim and successor Roh Moo-hyun, returned from a trip to North Korea. They apparently failed to budge communist leaders in their stalemate with the United States.

Opposition politicians have criticized Kim's "sunshine" policy of engagement with North Korea, saying he pampered the Stalinist country with economic aid and other concessions.

"This proves that this government's biggest achievement — the June 15 South-North summit — was bought with money," opposition party spokesman Park Jong-hee said in a statement yesterday.

Both Hyundai and Kim have denied allegations of payoffs. Hyundai had no immediate reaction to the disclosure.

Hyundai launched a series of high-profile, government-backed investment projects in North Korea in 1998, but the projects — including a plan for an industrial park and a tourism project in the North's Diamond Mountain — incurred heavy losses.

The political opposition demanded that prosecutors investigate whether Hyundai used the money to bribe North Korea's government, or if Kim's government funneled the money through Hyundai to pay off the North for holding the summit last year.

"President Kim must explain before the public the suspicion about a behind-the-scene deal with North Korea and apologize," party spokesman Park said.

The opposition party also denounced the audit report as a cover-up.

Auditors said they had no legal ground to prosecute Hyundai officials. Kim, who leaves office in late February after a five-year term, said he opposes prosecutors investigating the case.

"If the money was spent on promoting South-North economic cooperation, it is not desirable to make it a subject of judicial judgment for the sake of national interests," Kim was quoted as saying by his spokeswoman, Park Sun-sook.

"The unique nature of South-North relations has forced me to make numerous tough decisions as the head of state, and I always put the interests of our people and nation at the forefront," Kim said.

Kim, who won the Nobel Prize chiefly for his efforts to reconcile with North Korea's President Kim Jong Il, said Hyundai's joint projects in the North have "the nature of national projects" as well as being private ventures.

Geir Lundestad, secretary for the Nobel Peace Prize committee in Norway's capital of Oslo, said yesterday the group has no comment on the allegations against Kim. He said the allegations have not been substantiated.

Kim's opposition first made the allegations of a payoff to North Korea last year — saying that all or part of the $330 million drawn by Hyundai in loans from the state-run Korea Development Bank might have gone to the North.

The company was in deep financial trouble when it received the loans, which it repaid when its finances improved.

In his last months in office, Kim has insisted that South Korea continue to engage North Korea with dialogue and economic exchanges, although the United States has said it won't reward the communist nation for "blackmailing" the world.

The apparent failure of the South Korean mission to North Korea earlier this week raised the possibility that the U.N. nuclear agency soon may take the issue to the U.N. Security Council, which could impose sanctions to pressure the impoverished North to abandon its nuclear ambitions.

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