Lee Myung-bak faces new fraud probe in S Korea

PRESIDENTIAL RACE: Lawmakers from Lee's Grand National Party did not take part in the vote for a special investigation into his business dealings


Tue, Dec 18, 2007 - Page 1

South Korea's parliament voted yesterday to launch a new probe into fraud allegations against presidential opposition frontrunner Lee Myung-bak two days before the country goes to the polls.

A specially appointed independent lawyer will investigate claims including share-rigging, faking documents and embezzlement against Lee, the favorite in tomorrow's election, in the wake of new video evidence.

Analysts said Lee is still expected to win the presidency, but that the affair would cloud his first months in office.

It was unclear when the new probe would start. If elected, he would assume office on Feb. 25 and as president would have immunity from prosecution.

The business-friendly Lee, 65, was cleared on Dec. 5 of a fraud allegedly engineered by his business partner and linked to the BBK investment firm.

However, government allies accused prosecutors of bias and pushed for an independent probe.

Some 160 lawmakers voted in favor of appointing the special counsel, with none against. Lee's conservative Grand National Party (GNP) did not participate.

"The motion on appointing an independent counsel has been passed," a parliamentary official said.

Pressure to reopen the probe was spurred on Sunday with the release of a video clip recorded in 2000 in which Lee appears to say during a speech at a university that he founded BBK.

He had previously denied involvement in the firm.

The video clip came to light after police arrested three men for trying to extort 2 billion won (US$3.2 million) from the GNP in return for withholding the tape.

Lee, a 65-year-old former construction executive, is seen by many as the candidate best suited to reinvigorate the economy after years of relatively modest growth.

When the deadline for opinion polls expired last week, he was almost 30 percentage points ahead of his closest rival.

The request for a special investigator was sent to the government yesterday for approval, and South Korean President Roh Moo-hyun is expected to endorse it, presidential spokesman Cheon Ho-seon said.

Roh told his justice minister on Sunday to consider reopening the prosecution probe, an action denounced by the GNP as interference in the election.

Roh is barred by the Constitution from standing for a second five-year term. Most of his political allies are members of the newly formed UNDP.

The justice ministry side-stepped Roh's call yesterday but said it would accept any inquiry by an independent counsel.

Lee said yesterday that he made "erroneous remarks" in the university speech while he was promoting a separate new business venture. But he again denied he had owned BBK.

Opponents went for the jugular.

"As of yesterday, GNP candidate Lee Myung-bak is nothing more than a criminal," UNDP candidate Chung Dong-Young said. "He must immediately stand down."

Analysts said the GNP candidate was still expected to win.

The video "will deal a painful but not lethal blow to Lee Myung-bak," said Chun In-young, a political science professor at Seoul National University.

Chun said Lee will still likely win but will be damaged while in office by the possibility of being questioned by an independent counsel, adding: "It may be hard for him to push for strong policies in office."