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SEOUL, May 16 (Reuters) Hyundai Motor Co. said on Tuesday it was indefinitely postponing the construction of its 1 billion euro plant in the Czech Republic, due to legal action against its chairman over a cash-for-favours bribery scandal.

''The construction has been postponed indefinitely,'' Hyundai spokesman Jake Jang told Reuters by telephone.

''The chairman has to come back to the management to make such important decisions.'' South Korean prosecutors on Tuesday indicted Chung Mong-koo, chairman of the Hyundai Motor group, on charges of embezzling 103.4 billion won ($109.2 million) in company funds. Chung is awaiting trial and is being held in a detention centre near the capital Seoul.

Hyundai Motor, South Korea's top auto maker, said last Friday its planned plant in the Czech Republic would have 847 billion won in capital. It said it would then take out loans to boost its investment to 1 billion euro ($1.29 billion) -- one of the biggest foreign direct investments in the EU newcomer's history.

The factory is expected to produce 300,000 cars starting in 2008.

Hyundai, the world's seventh-largest car maker with its affiliate Kia Motors Corp. in terms of sales volume, said in the filing to the regulatory Financial Supervisory Service on Friday that the company aimed to boost sales and promote its brand image in Europe by producing cars there.

Some analysts are concerned that 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.

Shares in Hyundai closed up 0.12 percent at 81,300 won and Kia shares fell 1.17 percent to 16,900 won while the broader market lost 2.25 percent.

''Hyundai Motor shares have been hit a lot, and the market is feeling that the effects have been already priced in. The company should be able to move forward from this. One person alone is not the entire company,'' said Lim Chang-gue, a fund manager at Samsung Investment Trust Management.

REUTERS PV KN1450