South Korea running out of time to track down ex-military dictator's $143M slush fund

Former South Korean President Chun Doo-hwan owes the country 167.5 billion won ($143.5 million) that he was found to have amassed through corruption during his 1980s rule, but he insists he's broke. Prosecutors have less than four months left to prove him wrong.

A statute of limitations will soon wipe away Chun's obligation to pay back the money, to the chagrin of South Koreans who remember the military dictator for not only his cozy relationships with businessmen but also for a deadly crackdown on pro-democracy protesters.

Lawmakers plan to meet Tuesday to debate legislation that could extend the search and hold his family accountable for the money, but even if it passes, such retroactive changes could be rejected in court. Last month, the new chief of the state prosecution office urged an "extraordinary" push to collect from the 82-year-old, who seized power in a 1979 army coup and ruled South Korea until early 1988.

Chun's departure as president marked the end of military rule and the beginning of democracy in South Korea. In 1996, he was convicted of corruption and for his role in the 1980 crackdown, which left about 200 people dead in the southwestern city of Gwangju, according to an official estimate. He was sentenced to death, though he received a reduction in sentence and later a pardon.

He also was ordered to pay back the 220.5 billion won ($189 million) "slush fund" that officials said he had amassed from dozens of businessmen in return for government contracts and other favors. He has since returned 53 billion won ($45 million) to the government.

Prosecutors still have the opportunity to recover funds because under the law, the statute of limitations is extended three years every time an asset is seized. That has happened several times: A Mercedes-Benz sedan belonging to Chun was seized in 2000, and in 2010 he voluntarily paid 3 million won ($2,600) in what was seen by many as an effort to prevent authorities from confiscating larger assets.

Chun could extend the statute again with another voluntary payment, but it is unclear whether he will make one. Repeated calls by The Associated Press to his lawyers went unanswered.

In his 1996 bribery trial, Chun admitted receiving a massive slush fund when he took power, but he said he was simply following the practice established by his military predecessors.

"When judged by today's yardstick, it may be wrong, but in those days, it was customary to receive donations," he said during his closing arguments.

By 2003, Chun was saying the money was gone. He was ridiculed when he reportedly said at a court hearing that year that he had less than $300.

Chun reportedly said at the hearing that he was living off money from his sons and supporters, but wouldn't ask his sons to help pay his debt because "they have to make a living, too."

Chun's wife told reporters in 2012 that the ex-president had paid all he could. That same year, the Kyunghyang Shinmun daily reported that he played golf and had a whiskey party at an island resort off the west coast.

Opposition lawmaker Jun Byung-hun alleges that Chun's three sons received assets from their father now worth a total of more than 300 billion won ($260 million). The number couldn't be verified independently, and his office wouldn't say where it came from.

The former leader's eldest son, Chun Jae-kook, runs a publishing company that posted revenue of 44 billion won ($38 million) last year, according to its audit report. Sigongsa Inc., founded in 1989, has stakes in 13 companies. Half its shares are owned by Chun Jae-kook and another 20 percent are owned by other relatives, according to the report.

Jun said another son, Chun Jae-man, operates a California winery worth 100 billion won ($86 million) with his father-in-law, businessman Hi Sang Lee. The website for Rutherford, California-based Dana Estates describes the two as proprietors, and says Lee purchased the winery in 2005.

The South Korean partner of the Washington-based International Consortium of Investigative Journalists said that Chun Jae-kook set up a fake company in the tax haven of the British Virgin Islands in 2004, fueling local media speculation that he may have used the company's bank account as a conduit to stash his father's money.

In a statement released through his company, the son said the account had nothing to do with his father and that he would cooperate with any government investigations.

The Supreme Prosecutors' Office has declined to comment on whether it's looking into a link between Chun Doo-hwan and the offshore company.

The proposed bills in the National Assembly would extend the statute of limitations to 10 years, instead of the current three years, every time an asset is paid or confiscated. They also would allow authorities to collect from Chun's family members if he can't pay.

The ruling Saenuri party agrees on the need to collect from Chun, but expresses worry that the bills would unconstitutionally override the statute of limitations set up when Chun was convicted, and also would make family members guilty just because of their association with him.

Ahn Chang-nam, a tax professor at Kangnam University in South Korea, said proving a connection between Chun's slush funds and his family's money is a daunting task because evidence could have been manipulated or destroyed while Chun was in power.

Details about the slush fund are unclear. Chun's former chief bodyguard testified in 1996 that Chun gave Roh Tae-woo, his friend from the military and successor as president, $230 million in cash to help finance his 1987 presidential campaign.

Roh was later sentenced to 22½ years in prison and ordered to pay back 260 billion won ($225 million) he had received as bribes from businessmen. The 80-year-old, who was pardoned along with Chun, has paid back more than 90 percent of the money, and most of the assets that would account for the outstanding balance have been discovered.

Earlier this month, President Park Geun-hye, a conservative who took office in February, criticized past governments for failing to collect entirely from Chun and Roh and said she was trying to resolve the matter.

But the opposition has raised past links between Chun and Park, who acknowledged during a presidential debate last year that she had received about 600 million won ($516,000) from Chun following the 1979 assassination of her father, President Park Chung-hee, who ruled South Korea for 18 years after he seized power in a 1961 coup.

Park Geun-hye said she was told at the time that receiving the money wouldn't be a problem. Although the timing is unclear, Park plans to return the money, according to the presidential Blue House. The money reportedly came from a secret coffer of her father's.

Kim Sung-joo, a political science professor at Seoul's Sungkyunkwan University, expressed skepticism that all Chun's money would be collected, saying senior officials who once served Chun still hold sway today and will be reluctant to press the matter because of the special benefits they received.

"Without closing this chapter on Chun and his slush money, South Korea can't establish a sense of social justice that future generations can be proud of," Kim said.

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