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North Korea says reconsidering business with South

Posted on: Thursday, 20 October 2005, 03:53 CDT

By Martin Nesirky

SEOUL (Reuters) - North Korea is reconsidering how it does business with the South because its main partner, part of the Hyundai Group conglomerate, sacked an executive with close ties to leader Kim Jong-il, the North said on Thursday.

Earlier this month, the Hyundai Asan subsidiary that handles projects worth about $1 billion in the North severed its last tie with Kim Yoon-kyu, who had already been sacked as president of the firm in August for what the company said was graft.

"This incident has proven Hyundai's lack of trust," said a North Korean spokesman, quoted by the official KCNA news agency. "We will have to reexamine and readjust all the businesses conducted with Hyundai."

Although it was not immediately clear whether Pyongyang would follow through on the rhetoric, any undermining of Hyundai Asan's role at an industrial park and tourist resort in the North could have a potentially profound effect on bilateral relations just as they seemed to be gradually warming.

Hyundai Asan was seemingly surprised by the comments from an unnamed spokesman for the Asia-Pacific Peace Committee that governs North-South business ties.

"We just saw the news," a Hyundai Asan spokesman said by telephone. "We don't have any comment right now."

But Hyundai Group chairwoman Hyun Jeong-eun sent a letter to Hyundai Asan employees on October 10, referring to Kim Yoon-kyu.

"We recently had a big operation to remove a large boil inside our body. If we hadn't cut that out, it could have grown bigger and forced us to cut off arms or legs," she said. "While we are in recovery, our old friend refuses to see us again, saying we look different."

SPRINGBOARD OR REVERSE GEAR?

Hyundai Asan has said in a statement it suspected Kim Yoon-kyu, a trusted confidant of the North Korean leader, of siphoning off about 820 million won of company money for personal use. Kim Yoon-kyu was not available for comment.

Hyun said Hyundai Asan and North Korea had a long history of friendship and difficulties could provide a springboard to allow the firm's North Korean business to grow further.

A South Korean government official said on condition of anonymity the North could mean the reverse of what it was saying.

Its economy is in ruins and so outside help is vital, despite the leadership's home-spun "juche" philosophy of self-reliance.

Although the government has been keen to stay out of the row, South Korean officials will get a chance to quiz the North if they wish at economic cooperation talks scheduled for next week in Kaesong, the North Korean city that lends its name to the industrial park Hyundai Asan is building nearby.

"The North appears to think there is a need to resolve the current problems early because losses are continuing," said Vice Unification Minister Rhee Bong-jo at a briefing.

The North is expressing its disappointment with Hyundai but still likely wants to move on with its business partner, he said.

The North has already halved to 600 the daily number of South Korean tourists it allows to visit the Kumgang mountain resort to the north of the Demilitarised Zone frontier on the opposite coastline from the Kaesong industrial park.

KCNA quoted the North Korean spokesman as saying Pyongyang would try to find another company to work with to set up tours around the city of Kaesong. One conglomerate, the Lotte Group, has already said it turned down North Korean advances.

(Additional reporting by Rhee So-eui, Jack Kim and Lee Jin-joo)

Source: REUTERS

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