A senior executive of a pro-Pyongyang group of Korean residents of Japan was arrested on Wednesday for allegedly ordering the embezzlement of 820 million yen from the failed Chogin Tokyo credit union.

Kang Young Kwan, a 66-year-old executive of the General Association of Korean Residents in Japan (Chongryun), had been hospitalized in Tokyo but was released for questioning, police sources said.

In consultation with Kang's doctors it was judged that he would be able to withstand detention, they added.

Kang currently serves as a member of Chongryun's central standing committee. He became a full-time employee of the Korean residents' group in 1960, working in the organization's financial bureau and heading the section from 1993 to 1999.

Earlier in the day, prosecutors indicted Chong Gyong Saeng, 64, and Sin Byong Jung, 54, both former heads of Chogin Tokyo, on charges of obstructing a 1998 Tokyo Metropolitan Government financial inspection of the union.

According to investigators, Kang instructed Chong and other Chogin Tokyo executives to illegally divert 820 million yen from the credit union's funds in the form of fake loans to 23 firms and individuals from around 1994 to 1998.

Chong and the others allegedly forged promissory notes for the credit union with the names of the companies and individuals that purportedly received the loans and used them as collateral. When settlement dates for the notes came, they replaced them with new notes, the sources said.

Police believe 70 percent of the money allegedly embezzled was used to falsely show that interest on the union's loans to Chongryun officials had been repaid, while the other 30 percent went directly to Chongryun, the sources said.

The credit union collapsed in May 1999.