Archives: Q&A on Multibillion-Dollar Hanbo Scandal

Kim Hyun Chol, 38, second son of Kim Yong Sam, rocked the nation last January for his unrivalled power abuse in the largest bribe-for-loan scandal dubbed “Hanbogate.”

Junior Kim, who was arrested last May on charges of graft and tax evasion, is now awaits his sentence slated for Sep. 8 this year.

Here we introduce Q&A on Hanbo scandal in which a son of incumbent president was grilled and booked for the fist time in south Korea’s modern history.

A: The Hanbo scandal refers to a multibillion dollar steelmaker affair involving members of the inner circles of Kim Yong Sam and his second son Kim Hyun Chol.

Locally dubbed as "Hanbogate," the scandal erupted on Jan. 23, 1997, when Hanbo Iron & Steel Co., south Korea's 2nd largest steel maker, went bust owing $6 billion as against its equity capital valued at only $260 million.

A number of bigwigs were implicated, because all bank loans above 10 billion won must be cleared by the presidential office under the existing laws.

What was called "a thorough investigation" led to arrests of ten lawmakers and Kim Hyun Chol, second son of Kim Yong Sam. They were charged with taking bribes from Chung Tae Su, Hanbo head, in return for pressuring banks to extend huge bank loans to Hanbo.

Home Minister Kim U Suk, one of Kim Yong Sam's confidants, was sacked on charges of taking 200 million won in kickbacks for building a road and other favors for Hanbo Steel while he served as the construction minister from 1993 to 1995.

It is illegal for any politician to receive more than 30 million won in political contributions from individuals like Chung.

Hwang Byong Tae, a ruling party assemblyman, was booked for helping Hanbo obtain $59 million in preferential loans from the government-controlled Korea Development Bank.

Kwong Ro Gap, a vice president of the main opposition National Congress for New Politics, was held on charges of receiving $176,000 in a hotel room and opera house from Chung Tae Su, who asked him not to table Hanbo's backdoor deal in Parliament. Hanbo patriarch Chung was apprehended on Jan. 31.

Kim Hyun Chol, who ran a political organization that helped his father win presidency in 1993, is now standing trial on charges of taking $358 million in bribes from businessmen (other than Chung Tae Su) seeking his influence and also charged with evading $1.5 million in taxes.

Hyun Chol was cleared in the Hanbo affair last May, but on May 6 prosecution seized $14.8 million of the political fund - money left over from 1992 presidential campaign - hidden by Hyun Chol, thus endorsing the allegation that his father received dirty money from a bunch of business tycoons including Hanbo patriarch Chung Tae Su.

Using more than 100 secret bank accounts under false names, younger Kim resorted to an intricate way of money laundering to hide the remainder of the campaign fund for his father's 1992 presidential election and the money he received from businesses.

A: As pundits point out, Chung gave at least 90 billion won in bribes to Kim Yong Sam during the 1992 election campaign. Kim Yong Sam has been under heavy fire for pressuring major banks to offer loans to the financially-strapped Hanbo, which had been tottering toward insolvency since 1989 as it began spending too much to construct a steel mill in Tanjin, 100km southwest of Seoul. Many considered it a white elephant from the start.

Chung, famous for his lobbying skills and extravagant spending habits, was once convicted of giving former president Roh Tae Woo 20 billion won ($23.3 million) in bribes during his 1987-92 term.

Chung was also found guilty of bribing a number of legislators in a land development in 1989.

"Kim Yong Sam took at least 300 billion won ($336 million) from Roh and 90 billion won from Hanbo to win his presidency," asserted NCNP leader Kim Dae Jung last June.

corruption and other crimes similar to those committed by Hyun Chol, already admitted collecting 500 billion won ($560 million) during his tenure.

Nevertheless, Kim Yong Sam on May 30 openly refused to disclose how much he received and spent during the 1992 presidential election as his ruling party destroyed all funding records after the election "in keeping with past practice."

Upon taking power in 1993, Kim promised "new" government distancing himself from the dreaded military strongmen - Chun Du Hwan and Roh Tae Woo.

Kim even committed himself to what he touted as "straightening out the history" only two years ago.

The so-called "thorough prove" into tainted politicians, especially in high posts, is almost impossible in south Korea where the nation's investigative power has been put under tight control by autocratic predecessors.

The past dictators - Pak Chung Hee, Chun Du Hwan and Roh Tae Woo - were all from Taegu city and Kyongsang Province (called TK area), and accordingly filled important posts with their yesmen to perpetuate their military junta in power.

Kim Yong Sam is no exception. He named his confidants to become prosecutor-general and senior prosecutors.