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(LEAD) Key figure in SK fund scandal arrested in Taiwan
SEOUL, Aug. 1 (Yonhap) -- A key figure in the high-profile embezzlement case involving the chairman of SK Group, South Korea's third-largest conglomerate, has been arrested in Taiwan, prosecution sources said Thursday.

   Taiwanese police arrested Kim Won-hong, a former adviser to SK Shipping Co., on Wednesday on charges of breaching the country's immigration law, the sources said.

   The arrest is expected to greatly influence the upcoming trial of Chey as Kim is suspected of masterminding the creation of slush funds belonging to SK Group Chairman Chey Tae-won and his younger brother as their private investment agent. The sentencing trial is scheduled to be held in about a week.

   Chey is currently undergoing an appeals trial after being sentenced to four years in jail early this year for embezzling huge amounts of company money in 2008 to make personal investments in stock futures and options.

   The 53-year-old chairman, who inherited the country's third-largest conglomerate from his father, is suspected of misappropriating 49.7 billion won (US$44.7 million) with the help of his younger brother, who is a senior vice chairman of the group.

   Since South Korea does not have an extradition treaty with Taiwan, Seoul's law enforcement authorities are discussing ways to repatriate Kim, a prosecution official said, requesting anonymity.

   "We received a call (about the arrest) from the South Korean diplomatic mission there," a justice ministry official said. "Since we're now addressing consular work (involving him), we should discuss details of the repatriation proceedings with the Taiwanese authorities in the future."

   Prosecutors were unable to investigate Kim since he fled to China before a probe into the SK slush fund scandal began. He had since been sought by Interpol.

   In the appeals trial, Chey has branded Kim as a main culprit in the case, claiming that it was Kim who pocketed the massive amount of conglomerate fund. Kim allegedly managed nearly 600 billion won transferred from Chey.

   The appeals court has tried to make him stand trial as a witness but experienced difficulty as it was unable to secure his custody.

   If Kim is extradited, it is highly likely that the court will have additional hearings to question him. The sentencing, scheduled for Aug. 9, may then be delayed.

   Prosecutors have asked for a six-year sentence for Chey and five years in jail for his brother Chey Jae-won.

   The younger Chey was acquitted by the lower court for a lack of evidence.