SEOUL - South Korean President Roh Moo-hyun apologized on Wednesday for a political funding scandal that has embroiled close aides and gave a surprisingly cautious assessment of where Asia's fourth-largest economy is headed this year.

In an address before a New Year's news conference, Roh also called for perseverance in the search for an end to North Korea's nuclear ambitions and said a US unofficial visit to the State last week would help dialogue succeed.

"It's important to be patient. It is important not to shake the stable basis of the process," he said during the news conference. "If it is shaken, it will affect the economy, and trigger other uncertainties."

He said the economy was showing signs of a turnaround in investment and consumption, but a slow pick-up was inevitable as long as consumers were under pressure to pay debts - including to stretched credit card companies.

Roh urged unions to refrain from demanding excessive wage increases. Foreign investors view labour strife as one of the main problems of doing business in South Korea.

"Without stable labour-management relations, it will be difficult for us to achieve the goals of improving competitiveness and creating jobs," Roh said.

His comments appeared more cautious than recent optimistic-sounding noises on the economy by the government, notably that the global economic recovery appeared stronger than expectations and export growth could have another brisk year.

The funding scandal, involving millions of US dollars of under-the-table donations from the country's "chaebol" business conglomerates, has tarnished the 57-year-old Roh's image as a reformist who crusaded to purge politics of corruption.

Staked reputation

Prosecutors indicted eight aides and donors last month for their part in illegal fundraising in the December 2002 election in which Roh defeated conservative opposition leader Lee Hoi-chang.

"The illegal presidential election fundraising and the misdeeds of those around me have disappointed everyone," Roh said. "I again extend my apology."

Such apologies are not new in South Korea. Several past presidents have been jailed or forced to apologize for corruption in office. But Roh's dilemma is greater because he has staked his reputation and his presidency on cleaning up politics.

Besides the aides, eight members of parliament were arrested over a scandal that has rocked Roh's year-old government and embarrassed the opposition ahead of parliamentary polls in April.

Yet Roh appeared to back away from his aim of holding a referendum on his rule, saying it would be difficult to organize such a separate vote and also tricky to tie a confidence poll to the April 15 parliamentary election.

The scandal emerged in October, prompting the opposition-controlled parliament to set up a special counsel to investigate three aides to Roh who have been implicated in illegal fundraising and other charges.

Roh is not a subject of the 60-day special investigation. But when the eight Roh aides or donors were indicted prosecutors said he was aware of some of the improper fundraising.

The prosecution stopped short of pursuing Roh, citing a constitutional law that exempts sitting presidents from being charged with criminal offences other than grave crimes threatening national security.

Asked about reports he had accepted money from a prominent businessman, Roh said he would not comment until the special investigation was completed.

Roh said on December 14 he would step down and retire from politics if his party was found to have received and used more than a tenth of the illegal political funds his opponent raised in the December 2002 election campaign.

The man Roh defeated in that election, Lee Hoi-chang of the main opposition Grand National Party, has admitted to taking 50 billion won (US$42 million) in illicit cash. Roh's indicted associates were accused of taking 6 billion won.

Late last year, scandal investigators raided the offices of SK, LG and most other major "chaebol", the family-owned business conglomerates that dominate South Korea's economy, and found some had contributed illegal funds to both campaigns in 2002.

(Agencies via Xinhua)