( AFP ) - South Korea's cabinet Wednesday approved a bill setting up a fraud inquiry into president-elect Lee Myung-Bak, one week after the conservative opposition candidate won a landslide election victory.
The special prosecutor who will lead the investigation is due to report just days before the February 25 inauguration, casting a cloud over Lee's transition.
Lee, who could be indicted or cleared, will be the country's first president-elect to face a criminal investigation.
Incumbent President Roh Moo-Hyun, who chaired the cabinet, did not veto the bill. He will early next month name an independent counsel to probe whether Lee was involved in a 2001 stock manipulation case.
The prosecutor should launch an inquiry around January 10 and complete an initial investigation by February 17.
Lee's Grand National Party (GNP) denounced Roh for failing to exercise his veto, saying the victory margin showed the public does not want a probe.
The GNP candidate beat his pro-government liberal opponent by the widest margin in the country's democratic history.
"The investigation by a special prosecutor is unconstitutional and illegal. It will also waste national energy and split public opinion," the party said in a statement.
State prosecutors early this month had cleared Lee of links to the case involving his former business partner, who is under arrest, and an investment firm called BBK.
But rivals then publicised apparent new video evidence of Lee's past connection to the suspect firm, prompting his parliamentary opponents to vote on December 17 for a new inquiry. GNP lawmakers boycotted that vote.
"Following the disclosure of the BBK video, the people's suspicions should be dispelled, due to the conflict between Lee's campaign remarks and what he actually said in the video," Roh was quoted by his spokesman as telling the cabinet meeting.
Roh also said there were no legal grounds to veto the bill because it was ratified by a majority of legislators and because Lee himself had vowed to accept it on the eve of election day.
Lee, a former construction executive and ex-mayor of Seoul, has said he is confident he will again be cleared.
Some analysts agree. "Given the size of his victory an indictment is unlikely..." said a report last week by the International Crisis Group.
Once inaugurated Lee would be immune from prosecution except for treason.
"Time is running short so technically it will not be easy for the special prosecutor to indict Lee before his inauguration," Dongguk University political science professor Park Myung-Ho told AFP.
"Even if the special prosecutor decides to do so, it will cause controversy among legal experts."
Lee, 66, this week announced his transition team, appointing the chief of a Seoul women's university to head it. Aides said he chose an academic rather than a politician, to highlight his desire for a non-partisan and pragmatic government when he takes over.
At his first post-election press conference, Lee had promised pragmatic policies aimed at revitalising the economy and persuading North Korea to denuclearise and improve its rights record.
He said companies had been discouraged by "anti-market and anti-business" sentiment under the outgoing Roh government.
The special prosecutor will investigate whether Lee and his then-partner were involved in stock price manipulation through BBK or other firms; whether Lee embezzled any proceeds of share manipulation; and whether separate allegations related to property dealings are correct.