South Korea indicted the chairman of Hyundai Motor on charges of embezzling company funds, part a drive to crack down on allegedly shady business practices at family-run chaebol conglomerates.
Chung Mong-koo, 68, the head of the country's top automaker, was arrested in late April after a month-long investigation into allegations that Hyundai Motor and its affiliates had created slush funds to offer cash for political favours. "Chairman Chung Mong-koo has been indicted today," Chae Dong-wook, a senior prosecutor at the Supreme Prosecutors' Office, told reporters on Tuesday.
Chung is accused of breach of trust and embezzling 103.4 billion won ($109.2 million) in company funds, some for personal use, and for incurring losses at group companies by forcing them to support weaker affiliates, Chae said during a briefing.
Some analysts are concerned the continued detention of Chung, known for his robust day-to-day management style, could create a leadership vacuum and delay the group's ambitions to become the world's No 5 auto maker by 2010 in terms of sales volume.
Along with its affiliate Kia Motors Corp, Hyundai Motor group is now the seventh-biggest auto maker in the world by sales.
Hyundai spokesman Jake Jang said the firm had indefinitely postponed the construction of a car factory in the Czech Republic, citing the chairman's absence.
"We hope Chairman Chung will return soon to take care of important management issues in the group," he added.
Chung is being held in a detention centre near the capital Seoul to await trial and could not be contacted.
Although the prosecutors' office did not specify the likely schedule for legal proceedings, some legal experts said the process including potential appeals could last about 18 months.
Korean criminal law requires that a first trial be completed within six months of arrest, or the defendant can be allowed to walk free.
Chung was arrested on April 28. Any appeal also would have to be lodged within six months of an initial ruling.