By Lee Jin-woo

A Seoul appeal court on Monday acquitted a former lawmaker and an ex-
intelligence official of charges of embezzling 119.7 billion won ($100 million) in state funds in 1995 to finance election campaigning, indicating the money came from then President Kim Young-sam, not from the spy agency.

Overturning a lower court ruling, the Seoul High Court said the case did not involve embezzlement by Kang Sam-jae, former Grand National Party lawmaker, and Kim Ki-sup, former deputy head of the Agency for National Security Planning (NSP).

The court, however, ordered Kang to pay 10 million won in fines for offering 167 million won in bribes to bank officials in return for laundering the secret funds.

Contrary to yesterday’s ruling, in September 2003 Kang was sentenced to four years in prison and fines of 73.1 billion won, while Kim received five years and fines of 12.5 billion won.

The not-guilty verdict indicated the diverted funds originated from former President Kim Young-sam, then leader of the now-defunct New Korea Party (NKP). Kang served as secretary general of the ruling party.

The lower court ruled the two accused had collaborated in diverting 85.6 billion won ($74 million) from the spy agency’s budget to finance local and general elections in 1995 and 1996 for the NKP. The prosecution indicted the two for diverting 119.7 billion won from the spy agency to finance the 1996 general elections.

The appeal’s court acknowledged Kang’s claim that ex-President Kim directly gave him 94 billion won at the presidential office, indicating a belief the ex-president was deeply involved in the funds scandal.

But Kim Ki-sup contradicted Kang’s claims. Kim has asserted the money came from the spy agency since decisions concerning the agency’s budget were made by him, emphasizing the scandal had nothing to do with the former president.

Protesting the verdict, the prosecution said it would take the case to the Supreme Court.

Any further moves by the prosecution aimed at getting to the bottom of the slush fund scandal are likely to involve an investigation of the former President Kim.

Kim Young-sam refused to attend court hearings early this year and firmly denied allegations he is the actual source of the funds.

Questions arose in 2001 over how the money was funneled to the party from the state intelligence agency’s bank accounts and who were involved in the illicit transfer.

High court judge Noh Young-bo said the illicit money came from the former president, which effectively cleared Kang and Kim of embezzlement charges.

The intelligence agency’s bank accounts showed a sudden input of more than 100 billion won in 1993, almost 20 percent of its usual budget, which suggested the money came from external sources for later delivery to the party, the court said.

Ex-president Kim is likely to have collected a large sum of money in secret funds and placed it temporarily in the bank accounts of the intelligence agency since its financial operations are usually beyond the reach of state auditors. He later withdrew it to deliver to Kang, the court said. How the former president, who held the position from 1993 to 1998, acquired the illicit money was not known.

things@koreatimes.co.kr