South Korean prosecutors have decided to scrap their investigation into payments made to North Korea prior to its summit with the South in 2000.

A spokesman for the prosecutors office said the investigation was being stopped in the "national interest".

We have decided to drop the investigation for the sake of the national interest and in consideration of the negative diplomatic impact Supreme Public Prosecutor's Office

The move follows a plea from South Korean President Kim Dae-Jung, who asked prosecutors to drop the case to allow the matter to be settled in parliament.

The decision is likely to anger opposition politicians, who have accused Mr Kim's government of being behind the money transfer, in order to gain from the summit politically.

Money transfer

The dispute centres on payments made to North Korea by the multinational conglomerate Hyundai shortly before the summit.

On 31 January investigators said the company had secretly transferred $200m to the communist North just a week before the landmark meeting.

Hyundai had borrowed the money from a South Korean state-controlled bank.

Opposition members claim the money was given as "payment" to the North for attending the summit - at the request of President Kim Dae-jung's government.

The summit increased Mr Kim's international standing, and contributed to his being awarded the Nobel Peace Prize in 2000.

North-South ties

On Monday President-elect Roh Moo-hyun backed Mr Kim's appeal for a "political" settlement to the dispute.

Mr Roh "wants details of the scandal to be brought to light, but it would be better to let the National Assembly decide how to resolve the dispute," his spokesman Lee Nak-yon said.

There are decades of mistrust between North and South Korea

But the main opposition Grand National Party has said it will push for a formal investigation.

"The only way of cleansing the sin of deceiving the people is to confess frankly and apologize sincerely," said Park Hee-tae, acting chief of the opposition.

The Hyundai group has done much to encourage links between North and South Korea.

But it has been badly affected by a joint venture tourism project with North Korea, and insisted it used the state-issued loan to improve its financial position.

Mr Kim, who has previously denied knowing about Hyundai's dealings with the North, appeared to acknowledge them on Thursday when his spokeswoman said that the money was justified "if (it) was spent on promoting South-North economic co-operation".

"The unique nature of South-North relations has forced me to make numerous tough decisions as the head of state," Park Sun-Sook quoted him as saying.