SKorea seeks 15 years in jail for Daewoo founder

SEOUL, May 9 (Reuters) South Korean prosecutors sought a 15-year prison sentence and the return of billions of dollars from the Daewoo group founder today, a once revered businessman who is suspected of massive fraud and embezzlement.

Kim Woo-choong, 69, turned Daewoo into the second-largest conglomerate in the country before fleeing in 1999 as his empire was collapsing under more than 75 billion dollar in debts.

He returned last June, saying he wanted to make peace with his past. Kim was taken into custody at the airport upon arrival on a flight from Vietnam.

Last year, prosecutors charged Kim with illegally procuring loans of about 10 trillion won, misallocating about 20 billion dollar in Daewoo funds through overseas accounts and helping doctor Daewoo's books to falsify assets of about 41 trillion won.

Kim could have faced from five years to life in prison on the charges.

Prosecutors today asked a court in Seoul for a 15-year prison sentence and for Kim to forfeit 23.2 trillion won, said Kang Chan-woo, a spokesman for the prosecutors' office, by telephone.

Local media reported prosecutors had told the Seoul Central District Court that Kim mismanaged the company and left South Korean taxpayers holding the bag for billions of dollars worth of losses.

A frail looking Kim did not speak to reporters. Court proceedings in the case have been delayed because Kim underwent heart surgery.

''I apologise to the people of Korea and the workers in Daewoo,'' Kim said in a statement in court, local broadcaster YTN reported.

Several leading executives at other family owned South Korean conglomerates, called chaebol, have been the subject of criminal probes in recent months.

Last month, South Korea arrested Chung Mong-koo, the chairman of the country's top automaker Hyundai Motor Co on charges of misusing company funds.

The chaebol were allowed to expand rapidly using easy credit from local banks helped by questionable ties with South Korean officials, who were often willing to turn a blind eye as the economy recovered from the ruins of the 1950-1953 Korean War.

The trend was partly blamed for contributing to the financial crisis of the late 1990s and also to poor corporate governance standards at many conglomerates.

In August 1999, the South Korean government took control of Daewoo's debts.

Daewoo, then a multinational giant in civil engineering, automobiles and shipbuilding, splintered into a clutch of businesses after its 1999 collapse.

REUTERS OM BD1507