S. Korea raids Hyundai offices in slush funds probe

SEOUL, South Korea -- South Korean prosecutors said they raided the offices of Hyundai Motor Co., South Korea's largest automaker, and its units Kia Motors Corp. and Glovis Co. as part of an investigation into slush funds used to lobby the government.

Hyundai Motor spokesman Lee Ki Hoon, Kia Motors spokesman Woo Sang Kyun and a Glovis financial officer, Joo Il Hak, confirmed raids took place Sunday in Seoul. They declined to elaborate.

Prosecutors raided the offices on suspicions funds used for illegal lobbying by Hyundai Motor were funneled through Glovis, said Chae Dong Wook, the prosecutor in charge of the investigation at the Supreme Public Prosecutors Office.

The spokesmen at Hyundai Motor and the two units declined to comment on the prosecutor's comments.

DetNews

More...it sounds like it isn't necessarily Hyundai that is in trouble, but rather this Kim guy who was head of Glovis, a Hyundai subsidiary.

Hyundai Motor Raid Sends Industry Reeling

Korea’s auto industry was in shock on Monday after prosecutors raided the headquarters of Hyundai Motor and subsidiaries in their investigation of a local lobbyist. Kim Jae-rok stands accused of bribing and illegally lobbying politicians and officials on the firms’ behalf. Hyundai Motor affiliates saw their stock prices plunge, and the move is expected to be damaging for the Korean car industry as a whole.

Foreign institutional investors vainly tried to make up for heavy selling by small shareholders. Hyundai affiliate Glovis, which is suspected of creating a huge slush fund for Kim to draw on, saw its share price fall by 15 percent, the maximum permitted range for one day, and other issues like Hyundai Autonet also dropped by more than 10 percent. Major Hyundai Automotive group subsidiaries Hyundai Motor, Kia Motors and Hyundai Movis fell 2.58 percent, 2.21 percent and 0.36 percent.

“It is hard to predict how the investigation will develop, but the investigation itself is a negative factor for share prices in the short term,” an official with a local securities firm said. Hyundai Motor was reeling from the blow. Some staffers said it was unlikely the nation’s biggest automaker would be in serious trouble, but the arrest of Glovis president Lee Ju-eun in the afternoon silenced them. Hyundai Automotive Group chairman Chung Mong-koo and his son Chung Eui-sun, the Kia Motors president, reportedly did not show up at company headquarters in Seoul and were briefed at a distance.

Digital Chosunlibo

Edited March 27, 200619 yr by mustang84