Probe targets Roh`s brother

Prosecutors said yesterday they secured a crucial statement that indicates former President Roh Moo-hyun`s elder brother was involved in an illegal lobby scheme in connection with the sale of a brokerage house.

They are investigating allegations that Roh`s acquaintances influenced National Agricultural Cooperative Federation to purchase now-defunct Sejong Securities Co. in January 2006 and pocketed billions of won as a reward.

The prosecutors said a witness involved in the case recently stated that part of the money was channeled into purchasing a building in Gimhae, South Gyeongsang Province, the hometown of the former president`s family.

The building`s actual owner is Roh`s elder brother, Roh Gun-pyeong, a prosecution official said, citing the unnamed witness.

The prosecutors plan to summon the suspect this week for questioning. He has been banned from leaving the country.

Roh has denied the charge but admitted he called Jeong Dae-geun, then-chairman of NACF, to facilitate the deal. He was acting on the behalf of Hong Gi-ok, the largest shareholder of Sejong.

Hong was introduced to Roh through Jeong Hwa-sam, the former president`s high-school alumnus, who ran a golf club, and his younger brother. Hong allegedly paid the brothers about 3 billion won ($2 million). The former NACF chief also allegedly received 5 billion won from Hong.

Hong and the two Jeong brothers were arrested Sunday and Monday, respectively. The former NACF chief is serving time in prison for a separate bribery scandal.

The money delivered to the Jeong bothers is believed to be managed by Jeong`s son-in-law, who worked at Cheong Wa Dae between September 2007 and this February, while the former president was in office.

The former presidential official, surnamed Lee, laundered the money by depositing it under borrowed-name accounts, prosecutors said.

Lee purchased the commercial building with part of the money. Though registered under Lee`s name, it actually belongs to the elder Roh, the prosecution official said.

Investigators questioned Lee last week.

Prosecutors are tracking the bank accounts of those implicated in the scandal to determine whether the money was shared by others.

In July 2004, the elder Roh was given a one-year suspended jail term for receiving 30 million won in September 2003 from the late Nam Sang-guk, former president of Daewoo Construction, in return for helping him retain his post. He later returned the money.

Prosecutors are also looking into allegations that the former president`s close associates used insider information in trading shares of Sejong securities.

Prosecutors are reviewing the result of Korea Exchange`s investigation into the alleged illegal stock trading.

The Korea Exchange conducted the inquiry for five months in 2006 and concluded that no wrongdoing was committed.

Roh`s long-time political sponsor Park Yeon-cha, chairman of sneakers manufacturer Tae Kwang IND. Co., reaped profits estimated at about 17.8 billion won after trading shares of Sejong through borrowed-name accounts.

The National Tax Service recently accused Park of dodging tax payments. Investigators are now seeking to verify whether Park amassed slush funds through tax evasion. Last week, Park admitted committing tax evasion in an interview.

Park is also under investigation for the sale of HUCHEMS - a chemical product manufacturer previously owned by the NACF - to Tae Kwang.

In June 2006, the NACF originally agreed to sell 46 percent of HUCHEMS` shares, but significantly discounted the purchase price, stoking corruption allegations.