North Korea yesterday defended South Korean president Kim Dae-jung against allegations that he bribed Kim Jong-il, the North's leader, to take part in their historic summit three years ago.

Pyongyang dismissed the allegations as a smear campaign by rightwing South Korean politicians opposed to reunification of the divided peninsula.

South Korea's board of audit ruled last week that Hyundai Group, one of the country's biggest conglomerates, had secretly funnelled $192m (£123m) to the North around the time of the inter-Korean summit in Pyongyang. Opposition politicians have claimed that Hyundai was used by the government as a conduit for clandestine payments to secure Kim Jong-il's participation in the June 2000 meeting, for which Kim Dae-jung won the Nobel Peace Prize.

"Some ultra-right conservative anti-reunification forces brought up the issue in a sinister bid to bar the inter-Korean relations from smoothly developing," said North Korea's state news agency. Pyongyang said its relationship with Hyundai was "non-governmental".

Hyundai said the cash, part of a $344m loan from the state-controlled Korea Development Bank, was ploughed into its cross-border businesses, including a tourist resort in the North.

The board did not find evidence of government involvement in the secret investment but could not determine what the money was used for. Seoul has denied involvement in the scandal.

Hyundai is one of the few South Korean companies to have invested in the North. Critics said Hyundai's cash could have been used by North Korea to develop nuclear weapons.