Hyundai chairman and son to donate $1.1 billion in assets to public amid scandal

SEOUL, South Korea (AP) _ Hyundai Motor Co. said Wednesday its chairman and his son will donate $1.1 billion worth of personal assets to the public amid a slush fund scandal engulfing South Korea's

Wednesday, April 19th 2006, 8:27 am

By: News On 6

SEOUL, South Korea (AP) _ Hyundai Motor Co. said Wednesday its chairman and his son will donate $1.1 billion worth of personal assets to the public amid a slush fund scandal engulfing South Korea's largest automaker.

Hyundai made the announcement in a statement, saying it ``apologizes'' for causing concerns to the public. Hyundai Motor is headed by Chung Mong-koo. Kia Motors Corp., its affiliate, is led by his son Chung Eui-sun.

The announcement came as prosecutors have aggressively questioned company officials in recent weeks over allegations Hyundai created a slush fund to buy influence with government officials.

In the statement, Hyundai said it would ``actively cooperate'' with the ongoing investigation and plans to set up an ethics committee composed of outside directors and outside experts.

The investigation has centered on suspicions Hyundai embezzled money from affiliates to create a slush fund and used it via at least two lobbyists to seek favors from the government.

The lobbyists have been arrested on charges of receiving money from Hyundai in exchange for promises to help the company win construction approvals and permits and other business favors.

It is unclear if the lobbyists bribed government officials. It's illegal in South Korea to accept money in return for exercising influence.

Over the past month, prosecutors have raided offices of Hyundai and its three affiliates _ Kia Motors Corp., logistics unit Glovis Co. and auto-parts maker Hyundai Autonet _ and questioned key officials.

Prosecutors last week questioned two other top Hyundai executives as well as a former deputy governor of the state-run Korea Development Bank.

Hyundai said the Chungs would make the donation using their stockholdings in the Glovis subsidiary.

Lee Jeon-Kap, vice chairman of Hyundai Motor, said in the statement that the Chungs ``will donate all their personal shares in Glovis to society without any conditions ... to assume the corporation's social responsibility and ethnical duty.''

He said the money will go to ``social welfare foundations.'' The statement did not specify the timing of the donation.

The Chung family holds a combined 60 percent stake, or 22.5 million shares, in Glovis. The elder Chung holds a 28.1 percent stake and his son 31.9 percent, according to Hyundai.

Their combined stake is valued at around 798.8 billion won ($846 million) based on Wednesday's closing price, according to calculations by Dow Jones Newswires.

Park Sang-woo, a Hyundai spokesman, said the Chungs will use other assets if the value of the shares proves insufficient to meet the pledge at the time of the donation.

In February, South Korean conglomerate Samsung Group said it would donate more than $800 million in corporate and private assets to charity as part of an apology for several scandals.