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SKorea hunts for ex-dictator's slush money: $143M

Monday - 6/24/2013, 10:06am  ET

South Korean protesters stage a rally demanding their government to recover former South Korean President Chun Doo-hwan's slush fund in front of the ruling Saenuri Party headquarters in Seoul, South Korea, Monday, June 24, 2013. Prosecutors are racing against time to collect 167 billion won ($144 million) from Chun’s slush fund - a hunt meant to help close one of modern South Korea’s darkest chapters. The letters at a banner read: "President Park Geun-hyun must punish Chun Doo-hwan according the the law." (AP Photo/Yonhap, Bae Jung-hyun) KOREA OUT

SAM KIM
Associated Press

SEOUL, South Korea (AP) -- Former South Korean President Chun Doo-hwan owes the country 167.5 billion won ($143.5 million) that he was found to have amassed through corruption during his 1980s rule, but he insists he's broke. Prosecutors have less than four months left to prove him wrong.

A statute of limitations will soon wipe away Chun's obligation to pay back the money, to the chagrin of South Koreans who remember the military dictator for not only his cozy relationships with businessmen but also for a deadly crackdown on pro-democracy protesters.

Lawmakers plan to meet Tuesday to debate legislation that could extend the search and hold his family accountable for the money, but even if it passes, such retroactive changes could be rejected in court. Last month, the new chief of the state prosecution office urged an "extraordinary" push to collect from the 82-year-old, who seized power in a 1979 army coup and ruled South Korea until early 1988.

Chun's departure as president marked the end of military rule and the beginning of democracy in South Korea. In 1996, he was convicted of corruption and for his role in the 1980 crackdown, which left about 200 people dead in the southwestern city of Gwangju, according to an official estimate. He was sentenced to death, though he received a reduction in sentence and later a pardon.

He also was ordered to pay back the 220.5 billion won ($189 million) "slush fund" that officials said he had amassed from dozens of businessmen in return for government contracts and other favors. He has since returned 53 billion won ($45 million) to the government.

Prosecutors still have the opportunity to recover funds because under the law, the statute of limitations is extended three years every time an asset is seized. That has happened several times: A Mercedes-Benz sedan belonging to Chun was seized in 2000, and in 2010 he voluntarily paid 3 million won ($2,600) in what was seen by many as an effort to prevent authorities from confiscating larger assets.

Chun could extend the statute again with another voluntary payment, but it is unclear whether he will make one. Repeated calls by The Associated Press to his lawyers went unanswered.

In his 1996 bribery trial, Chun admitted receiving a massive slush fund when he took power, but he said he was simply following the practice established by his military predecessors.

"When judged by today's yardstick, it may be wrong, but in those days, it was customary to receive donations," he said during his closing arguments.

By 2003, Chun was saying the money was gone. He was ridiculed when he reportedly said at a court hearing that year that he had less than $300.

Chun reportedly said at the hearing that he was living off money from his sons and supporters, but wouldn't ask his sons to help pay his debt because "they have to make a living, too."

Chun's wife told reporters in 2012 that the ex-president had paid all he could. That same year, the Kyunghyang Shinmun daily reported that he played golf and had a whiskey party at an island resort off the west coast.

Opposition lawmaker Jun Byung-hun alleges that Chun's three sons received assets from their father now worth a total of more than 300 billion won ($260 million). The number couldn't be verified independently, and his office wouldn't say where it came from.

The former leader's eldest son, Chun Jae-kook, runs a publishing company that posted revenue of 44 billion won ($38 million) last year, according to its audit report. Sigongsa Inc., founded in 1989, has stakes in 13 companies. Half its shares are owned by Chun Jae-kook and another 20 percent are owned by other relatives, according to the report.

Jun said another son, Chun Jae-man, operates a California winery worth 100 billion won ($86 million) with his father-in-law, businessman Hi Sang Lee. The website for Rutherford, California-based Dana Estates describes the two as proprietors, and says Lee purchased the winery in 2005.

The South Korean partner of the Washington-based International Consortium of Investigative Journalists said that Chun Jae-kook set up a fake company in the tax haven of the British Virgin Islands in 2004, fueling local media speculation that he may have used the company's bank account as a conduit to stash his father's money.

In a statement released through his company, the son said the account had nothing to do with his father and that he would cooperate with any government investigations.

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