Hyundai Motor Co Chairman Chung Mong-koo appeared yesterday for questioning by prosecutors about a slush fund scandal engulfing the largest automaker in the Republic of Korea (ROK).

A stern-looking Chung, wearing a pinstriped suit and walking slowly, arrived at the Supreme Prosecutors' Office in Seoul around midmorning. His arrival was broadcast live on cable news channel YTN.

"I am sorry to the people of the nation," Chung told reporters. "I will answer the prosecutors' questions."

Prosecutors questioned his son, Kia Motors Corp President Chung Eui-sun, last week. Kia is an affiliate of Hyundai. It was unclear how long the questioning might last. The younger Chung spent about 18 hours under interrogation before being allowed to leave. Prosecutors could not be reached for comment late yesterday afternoon.

Prosecutors have been investigating the Hyundai Automotive Group over suspicion it embezzled money from affiliates to create a slush fund and used the money, via at least two lobbyists, to seek favours from the government.

Over the past month, prosecutors have raided offices of Hyundai and its three affiliates Kia Motors, logistics unit Glovis Co and auto-parts maker Hyundai Autonet and questioned key officials.

The lobbyists have been arrested on charges of receiving money from Hyundai in exchange for promises to help the company win construction approvals and permits, and other business favours.

It is unclear if the lobbyists bribed government officials. It is illegal in the ROK to accept money in return for exercising influence.

Earlier this month, prosecutors questioned two other top Hyundai executives as well as a former deputy governor of the state-run Korea Development Bank.

Hyundai announced last week that the two Chungs planned to donate one trillion won (US$1.1 billion) worth of personal assets to society. The company also said it "apologizes" for causing concerns to the public over the scandal.

Shares in Hyundai Motor fell yesterday, declining 3.3 per cent to 85,100 won (US$91). Kia shares dropped 3 per cent to 19,500 won (US$21).

Kim Hag-ju, an analyst at Samsung Securities in Seoul, said Hyundai's share price decline had more to do with a soaring Korean won, which can negatively affect exporters by making their products more expensive overseas.

"This scandal will not affect significantly (the) Hyundai Motor share price," Kim said. Hyundai's top-down decision-making process, however, could be slowed, he said.

Source: China Daily