S Korea issues arrest warrant for ex-KAMCO head

SEOUL, June 22 (Reuters) South Korea has issued an arrest warrant for the former head of a state-run debt restructuring agency on Thursday as prosecutors stepped up a probe into a cash-for-favours scandal involving the Hyundai Motor group.

Yon Won Young, former president of the Korean Asset Management Corp., was detained on Wednesday along with two other officials over allegations that he took bribes from Hyundai Motor officials.

''Arrest warrants for Yon and the two officials were issued,'' Kang Chan-woo, a spokesman for the prosecutors, told Reuters.

Yon's arrest is the latest in a string of detentions and arrests in an ongoing cash-for-favours probe at Hyundai Motor, whose chairman, Chung Mong-koo, is on trial for breach of trust and embezzling almost 0 million in company funds.

Chung was arrested in late April after a month-long probe into allegations that Hyundai Motor group, the world's number-six auto maker by sales volume, and its affiliates set up slush funds to offer cash for political favours.

In his second hearing on June 12, Chung admitted to having a role in setting up slush funds through affiliates of South Korea's top auto maker.

In a letter to the judge at the criminal division of the Seoul Central District Court, Chung apologised for raising and using the slush fund.

On June 14, prosecutors issued an arrest warrant for Byeon Yangho, the head of local private equity fund Vogo, over allegations related to his former role in the Finance Ministry.

Prosecutors have said they would not indict Chung Eui-sun, Chung Mong-koo's son and the president of Kia Motors Corp., saying the senior Chung had final responsibility.

Prosecutors did indict Hyundai Motor vice chairman Kim Dong-jin and three other senior executives at the Hyundai Motor group, but did not arrest them.

Some analysts worry that a leadership vacuum due to the arrest of Chung Mong-koo could damage Hyundai's ambition to be among the world's top five automakers by sales volume by 2010.

Shares in Hyundai ended up 1.6 percent at 76,000 won, outpacing a 0.95 percent gain in the broader market.

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