Sat, Feb 03, 2001 - Page 1 News List

Prosecutors eye Daewoo slush funds


South Korean prosecutors said they sought court approval yesterday to arrest five more former executives of Daewoo Group, accusing the bankrupt conglomerate of operating a multi-billion-dollar slush fund through its office in London.

Prosecutors are also trying to track down 65-year-old Daewoo Group founder Kim Woo-choong, believed to be hiding overseas, to persuade him to return and face charges of using the illicit fund for bribery and other purposes during Daewoo's reckless expansion in the 1980s and 1990s.

It narrowly escaped becoming the nation's largest bankruptcy in 1999 when domestic creditors agreed to delay repayment of its short-term debt and extend new loans. At the time, the group said its debt totaled only US$36 billion at home and US$9.94 billion abroad.

According to prosecutors, Dae-woo Corp, Daewoo's flagship trading arm, secretly borrowed US$7.5 billion in foreign-exchange loans through its London office and stashed much of the money in a slush fund.

Yesterday, they asked a Seoul district criminal court to issue warrants to arrest three former executives of Daewoo Corp, a former president of Daewoo Motor Co and a former president of Daewoo Heavy Industries Co on charges of fraud and violation of foreign exchange laws.

On Thursday, the court allowed prosecutors to arrest three former Daewoo executives on charges of falsifying books to exaggerate their companies' net worth in order to take out a combined US$1.2 billion in badly needed bank loans.

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