Lee Cleared, Kim Kyung-joon Indicted in BBK Scandal

Prosecutors on Wednesday cleared Grand National Party presidential candidate Lee Myung-bak of alleged involvement in an investment scam and charges of asset concealment. Senior prosecutor Kim Hong-il of the Seoul Central District Prosecutors Office, announcing findings in the investigation that has cast a heavy shadow over Lee's political future, said there was no evidence that Lee was the real owner of dubious investment firm BBK or auto parts company DAS. The office reached the conclusion 29 days after a special investigation team was set up to start looking into the allegations.

Kim Kyung-joon, Lee's former business partner who ran BBK and other firms linked to the scandal, was indicted on charges of stock price manipulation and embezzlement centered on a boiler-room operation called Optional Ventures Korea. But prosecutors said they found no evidence that Lee had been involved in or benefited from the investment scam. According to prosecutors, witnesses who had worked for Kim testified that they received their orders directly from the accused.

Prosecutors dismissed allegations that Lee had been the real owner of BBK. According to prosecutors, Kim in the course of the investigation changed his testimony and admitted holding a 100 percent stake in the defunct firm. There also apparently exists a memo written by Kim in February 2001 that says he would maintain a 100 percent stake. Prosecutors dismissed documents Kim and his family claimed were under-the-table contracts proving Lee's part-ownership as forgeries.

Lee, a former Seoul mayor, was also cleared of asset concealment in connection with DAS, which is registered in the names of his brother and brother-in-law. Prosecutors said there was no proof that Lee received dividends from DAS or participated in the decision-making process of the company. DAS had invested W19 billion (US$1=W923) in BBK, money Kim claimed came from Lee.

Kim was indicted on charges of embezzling W31.9 billion from Optional Ventures from July to October 2001, manipulating the company's stock price, forging seven passports and 19 documents involving the establishment of a U.S. subsidiary. Prosecutors are considering seeking the extradition of his sister Erica Kim, who is suspected of colluding in the embezzlement.