Top Seoul politicians offer to resign over bribe claims

Korean upheaval: Corruption scandal shakes government in South, as defector leaves North reeling

Seoul - South Korea's Prime Minister and its governing party chairman said yesterday they were ready to resign to take moral responsibility for a bribes-for-loans scandal.

"I believe the Prime Minister must take responsibility," Prime Minister Lee Soo Sung was quoted by his spokesman as telling a Cabinet meeting. "I have no intention to cling to my post."

Ahn Kwan Ki, Mr Lee's spokesman, said the Prime Minister held himself morally responsible, although he was not directly involved in the scandal, which centres on a bankrupt steel company.

Lee Hong Koo, chairman of the ruling New Korea Party, also told President Kim Young Sam that he was ready to resign, party officials said yesterday. Mr Lee had been seeking his party's nomination to run for president in an election scheduled for December.

It remained uncertain whether the President would accept the two leaders' offer to quit, officials said.

The offers came shortly after prosecutors called in two close aides to President Kim for questioning about alleged involvement in the scandal. Before he appeared for questioning, the Home Minister, Kim Woo Suk, also offered to resign.

Also questioned yesterday was Hwang Byong Tae, a former ambassador to China and now a ruling party MP. Kwon Ro Gap, a close confidant of opposition presidential hopeful Kim Dae Jung, was another politician questioned yesterday.

Two bank heads and two government MPs, including an aide to President Kim, have already been arrested on charges of taking bribes or peddling influence for loans to bankrupt Hanbo Steel Industry Co.

Hanbo Steel, a flagship company of the Hanbo group, South Korea's 14th largest conglomerate, collapsed on 23 January with $6bn debt, mostly in bank loans. Three other Hanbo subsidiaries also went under.

The Home Minister headed the Construction Ministry in 1993-1994, when Hanbo obtained a government permit to build a steel plant on reclaimed land. Mr Hwang was ambassador to China in 1993-1995, when Hanbo was looking into investments in steel and construction projects there. He heads the National Assembly's Finance Committee.

Mr Kwon, a vice president of the largest opposition party, the National Congress for New Politics, had earlier admitted receiving $180,000 from Hanbo but claimed it was a legitimate political contribution.

He also admitted later that he had received $116,000 from Hanbo through a government MP who was arrested on Tuesday on charges of taking an equal amount of cash in bribes from the steel company.

The developments were the latest in the 18-day government investigation into the scandal, which has become a major embarrassment for President Kim and his government.

Mr Dae-jung said he has evidence that the President received illegal political funds from Hanbo for his 1992 election campaign, which eventually laid the foundation for the preferential government bank loans to the steel company. The President did not respond to the accusation.