updated 2/20/2008 11:55:10 PM ET 2008-02-21T04:55:10

An independent counsel cleared President-elect Lee Myung-bak on Thursday of financial fraud allegations that had clouded his rise to South Korea's highest office.

The announcement put an end to suspicions that Lee colluded in a 2001 stock price manipulation case, a controversy that plagued Lee throughout last year's campaign.

"The president-elect was not involved in the stock price manipulation," special prosecutor Chung Ho-young said in a televised announcement of the outcome of a 38-day investigation.

Lee had strongly denied the allegations, and state prosecutors already had acquitted him of the charges weeks before the election. But rival politicians pushed for the special probe in an apparent attempt to keep the scandal alive through the vote.

Nevertheless, South Korean voters gave Lee a landslide victory in the Dec. 19 election.

The independent counsel also cleared Lee of allegations that he had owned a tract of land in southern Seoul under another person's name and lied about it, or that he gave illicit business favors to a company while serving as Seoul's mayor from 2002-2006.

"It is fortunate that all suspicions were cleared once again," Lee said in comments released by his office. "I thank the people who have given me trust and support so far. I think the way to repay this is to work harder and devote myself to serving the people and saving the nation's economy."

Partner accused of rigging stock prices
Lee's relatives and former business partners had attempted to stop the probe by filing a petition with the Constitutional Court, but the court ruled last month that the investigation could go on, making Lee the first South Korean president-elect to undergo a criminal inquiry. Special prosecutors questioned Lee on Sunday.

Even if Lee had been found at fault in the special probe, he would have still been able to assume office Monday as scheduled because the constitution grants sitting presidents immunity from criminal lawsuits unless they are accused of serious crimes such as treason.

However, such a case would have significantly undermined his mandate to assume the highest office in South Korea.

The scandal came to a head in November with the extradition from the United States of fugitive Korean-American fund manager Kim Kyung-jun, who once partnered with Lee to set up an Internet financial firm.

Kim was accused of making dozens of millions of dollars by rigging stock prices from a separate investment company and fleeing to the United States with the ill-gotten gains.

At issue have been allegations by Lee's liberal rivals that the money used for the stock manipulation came from a third investment firm, known as BBK, and that Lee was its real owner — meaning he was involved in the crime.

Lee has claimed the accusations were a plot by political rivals to discredit him.

Just days before the election, a 2000 video surfaced of Lee bragging in a speech that he founded BBK. Lee said the comments were taken out of context.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments