A trillion similar ways of saying sorry

Hyundai's top executives combine for a group apology at a news conference in Seoul yesterday. Picture / Reuters

SEOUL - Hyundai is to pay a trillion won ($1.67 billion) to charity and has apologised for causing "concern" to South Korean society over a probe into lobbying.

Prosecutors are investigating whether South Korea's top car-maker and its affiliates set up slush funds and were involved in suspected illegal political lobbying involving a local businessman.

"Hyundai will co-operate actively with the prosecutors' investigation and humbly accept the outcome of the probe," the company said yesterday.

The trillion won is made up of shares in vehicle shipper Glovis held by Hyundai's chairman Chung Mong-koo, and his son, Chung Eui-sun.

Shares in Hyundai, which have dropped nearly 10 per cent so far this year, rose 3.5 per cent to 91,100 won as investors hoped the donation would help ease pressure from the investigation. Glovis shares plunged 14.5 per cent to 35,700 won.

In a similar move last February, Samsung and its chairman pledged what local media said was a record donation of 800 billion won to charity as a way to atone for a spate of bad public relations and legal troubles.

At the time, Samsung said it would drop its protests against some legal claims brought by the Government against the company.

Media reports quoted Chae Dong-wook, a senior prosecutor at the Supreme Prosecutors' office, as saying Chung Eui-sun could be summoned for questioning today.

Prosecutors summoned Kim Dong-jin, the second highest-ranked executive at Hyundai, on Tuesday for questioning.

The ongoing probe touches on the way South Korea's sprawling family-run conglomerates, or chaebol, shift money within group companies, using complex share ownership networks to keep control of their businesses.

Bloomberg reports that prosecutors are investigating the circumstances under which licences were granted to build two blast furnaces at INI Steel, a Hyundai Motor affiliate and South Korea's second-largest steel-maker. They are also investigating a licence for a Seoul office building.

The probes have already led to the arrests of a lobbyist, the head of an accounting firm and the chief of Hyundai's logistics affiliate.

Officials at Hyundai said business had not been affected by the probe, which coincides with a push to expand overseas. Travel restrictions placed on the chairman and his son have delayed the opening of plants in the United States and the Czech Republic. The company aims to be the world's fifth-biggest car-maker by 2010.

- REUTERS