updated 4/27/2006 12:03:58 AM ET 2006-04-27T04:03:58

State prosecutors Thursday requested an arrest warrant for Hyundai Motor Co. Chairman Chung Mong-koo amid a bribery and slush fund scandal that has rocked South Korea’s largest automaker.

Prosecution spokesman Kang Chan-woo said that the arrest warrant was requested for Chung, while his son, Kia Motor’s Corp. President Chung Eui-sun would continue to be investigated without being detained.

The request is subject to approval by the chief prosecutor. It was not immediately clear when a decision would be made on approving the request.

Prosecutors have been investigating the Hyundai Automotive Group since last month over suspicion it embezzled money from affiliates to create a slush fund and used the money, via at least two lobbyists, to seek favors from the government.

“It is very shocking,” Hyundai spokesman Jake Jang said of the warrant. “Hyundai executives are all in a panic. The absence of Chairman Chung is enormous and its ramifications are beyond description.”

The move comes days after Chung spent about 15 hours Monday at the Supreme Prosecutors’ Office in Seoul for questioning over the scandal. Chung’s son spent about 18 hours there for questioning last week.

Hyundai spokesman Oles Gadacz said it wasn’t immediately clear if Chung had an attorney.

Prosecutors have raided offices of Hyundai Motor and its three affiliates — Kia, logistics unit Glovis Co. and auto-parts maker Hyundai Autonet — and questioned key officials.

The lobbyists have been arrested on charges of receiving money from Hyundai in exchange for promises to help the company win construction approvals and permits, and other business favors.

It is unclear if the lobbyists bribed government officials. It is illegal in South Korea to accept money in return for exercising influence.

Hyundai announced last week that the Chungs planned to donate $1.1 billion worth of personal assets to society, and that it “apologizes” for causing worries to the public.

The Hyundai group aims to become the world’s sixth-largest carmaker by 2010 and is aggressively expanding overseas production to meet the goal.

The investigation is taking a toll on Hyundai’s operations, Gadacz said, citing “management’s inability to focus.”

Hyundai has delayed a signing ceremony for its planned factory in the Czech Republic, while Kia has indefinitely put off breaking ground on its first U.S. plant, in Georgia.

Hyundai shares, which opened lower, extended losses after the announcement and were down 3.5 percent to 84,000 won ($89). Kia shares rose 1 percent to 19,550 won ($21).

Hyundai, which was expected to release its first-quarter earnings results Thursday, has delayed the announcement, which Gadacz said may come Friday.

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