But the vice chairman of Hyundai Motor, Kim Dong Jin, and three other senior executives at the Hyundai Motor group have been indicted without arrest, the official said Friday.

The Kia president is the son of Hyundai Motor chairman Chung Mong Koo, who was arrested in late April and is on trial on charges of embezzling company funds.

"We decided not to indict Chung Eui Sun because, from a legal point of view, Chung Mong Koo has final responsibility," said Kang Chan Woo, a spokesman for the Supreme Prosecutors' Office in Seoul.

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"There is something too harsh in indicting the son when the person responsible for the wrongdoing has already been arrested and indicted."

Kang said the senior Chung had admitted to some of the charges, but declined to elaborate.

In May, Chung Mong Koo, 68, was charged with breach of trust and embezzling 103.4 billion won (HK$847.9 million) in company funds, and with incurring losses at group companies by forcing them to support weaker affiliates.

Hyundai has apologized for the scandal and said the Chung family will donate their US$1 billion (HK$7.8 billion) stake in car shipping affiliate Glovis to charity. The case has cast the spotlight on management shortcomings at South Korea's powerful chaebols - the family-run conglomerates that helped rebuild the nation's economy after the 1950-1953 Korean War but were partly blamed for the financial crisis of the late 1990s.

Despite reforms brought in after the 1997-98 Asian financial crisis, some conglomerates are still run like family businesses, shifting money among group companies and using complex share ownership networks to control their business.

Shares in Kia closed up 1.27 percent Friday at 15,950 won, against a 1.02 percent gain in the broader market. Shares in Hyundai Motor, which have lost more than 20 percent of their value this year, climbed 1.87 percent to 76,400 won.

Since the scandal broke, Hyundai has delayed building a US$1.3 billion car factory in the Czech Republic, while Kia also postponed the ground-breaking of its first US plant in Georgia.

Nonetheless, Hyundai managed to lift its sales last month. The firm sold 228,712 vehicles in May, up 14.3 percent on last year. Exports rose 19 percent.

Hyundai has also become the top- ranked mass-market auto brand in the US market in an influential quality survey. Hyundai was No11 in last year's JD Power and Associates Initial Quality Study. REUTERS