Saturday, December 16, 2006

Prosecutors are tracing the bank account transactions of former Culture and
Tourism Minister Chung Dong-chea as they investigate suspicions that
government officials were bribed by businessmen looking for licenses to sell
gift vouchers used as payouts in an illegal gambling scheme. A former
assistant of Chung, identified only as Yoo, was arrested last month on
charges of taking 137 million won ($149,000) from executives of CS Club
Korea, one of the country's 19 companies authorized to issue the gift
certificates used at adults-only game arcades. ``We are looking into Chung's
financial transactions to confirm some suspicions. We have not found
anything as of yet worth commenting on,'' said an official from the Seoul
Central District Prosecutors' Office. ``We are looking into Chung's
financial transactions to confirm some suspicions. We have not found
anything as of yet worth commenting on,'' said an official from the Seoul
Central District Prosecutors' Office. Since the end of August, the
prosecution has mounted an investigation into allegations public officials
at the Culture Ministry and its sub-organizations were lobbied by companies
applying for licenses to sell game machines and gift vouchers. With the
investigation entering its fourth month, prosecutors have arrested more than
30 government officials, businessmen and members of organized crime units
involved in operating what were essentially gambling parlors. Baek Eeek, a
former director at the Culture Ministry arrested for taking 35 million won
from a gift voucher issuer, was sentenced to three years in prison and a
fine of 36 million won by the Seoul Central District Court Wednesday. Chung,
a lawmaker from the governing Uri Party, was at helm at the ministry from
2004 to March this year. During his tenure, the country saw the video slot
machine empire grew beyond recognition, with the ministry loosening business
restrictions on game arcades. Pressured by calls for an easier reviewing
process, the ministry, under Chung, introduced a permit system for companies
applying for licenses to sell the vouchers in March last year. The
certification process allowed any applying company to issue the vouchers by
meeting certain requirements in revenue and market coverage.

However, authorities were forced to scrap the new rating methods just three
months later, after it was found that some companies obtained licenses by
manipulating their sales records.

There have been suspicions that ministry officials rushed the introduction
of the permit system after being lobbied by the companies.

Prosecutors are pushing their probe further into politicians, planning to
summon Uri Party lawmaker Cho Seong-lae sometime next week for questioning
about his relationship with the owner of Friends C&M, one of the voucher
issuers. Investigators are currently tracing his bank account transactions.

Prosecutors could also call in Grand National Party (GNP) lawmaker Park
Hyung-joon for the second time next week. Park was summoned Wednesday after
it was found that he received 100 million won from a company issuing the
vouchers to fund a culture event he chaired.

The Culture Ministry's decision in 2002 to allow arcades to provide certain
types of gift certificates as payouts, has been widely blamed as the cause
of the rapid expansion of gambling, with most arcades unlawfully trading the
vouchers for cash.

Before the police clampdown in August, government authorities counted about
20,000 adults-only game arcades doing business around the country, most of
them providing gambling games _ that is double the number of 24-hour
convenience stores.

The recent gambling scandal first erupted in late July when prosecutors
indicted the chief executives of the two companies that manufactured and
distributed ``Pada Iyagi'' (Sea Story) video slot machines.

Most of the machines were illegally reprogrammed to allow higher payouts
than the legal limit of 20,000 won. ``Pada Iyagi'' is the country's most
popular slot machine game by far with more than 45,000 units sold.

Speculation of influence peddling mounted when it was found that Roh Ji-won,
one of President Roh Moo-hyun's nephews, worked as an executive of a company
acquired earlier this year by Zico Prime, the game's distributor.