Prosecutors to summon former top financial official in bribery case

South Korean prosecutors said Monday they will soon call in a former head of the state financial watchdog for their investigation into a bribery case involving his former subordinate.

Lee Keun-young, former head of the Financial Supervisory Commission (FSC), was allegedly involved in leading financial official Kim Jung-hoe's improper ties with an ex-department store owner, according to prosecutors.

Kim, vice chief of the Financial Supervisory Service (FSS) under the commission's control, was accused of accepting 230 million won (US$245,410) in return for influence peddling in 2001.

The regulatory official allegedly received the money from Kim Heung-ju, former head of Grace Department Store in Seoul, who made a failed attempt to take over a mutual savings bank.

Prosecutors raided Kim's home and office in Seoul and seized a computer and boxes of business documents as they launched a full-scale probe on Sunday.

"Questioning Lee will be inevitable in order to prove the allegations that it was Lee who instructed the deputy FSS chief to meet Kim Heung-ju," a prosecution official said requesting anonymity.

Prosecutors said they will investigate Lee over whether he was bribed by the businessman for allegedly acting as a bridge between the two Kims. Kim Jung-hoe was a director in charge of overseeing non-banking financial institutions at that time. He was promoted to the current post after Lee resigned as the FSC chief in early 2003.

The FSS vice chief is believed to have favorably introduced the department store owner to officials of the mutual savings bank to help facilitate the takeover bid.

Lee reportedly claimed he served as a go-between at that time "to quicken the sale of the troubled non-banking company and save public funds that otherwise might have been injected into the company."

The Seoul government poured massive amounts of public funds into financial companies to rescue them from the brink of bankruptcy after the late 1997 financial crisis.

The businessman signed a contract to buy a 30-percent stake and management rights in the Gold Mutual Savings Bank, but the bid failed due to strong opposition from the firm's labor union.

The businessman was arrested in December on charges of fraud, embezzling company funds and issuing bad checks after the failed deal. His department store went bankrupt three years ago.

Seoul, Jan. 8 (Yonhap News)