Prosecutors have found Cho Won-tae, chairman of Hanjin Group and Korean Air, borrowed and repaid 3 billion won ($2.5 million) from a man at the center of a far-reaching development corruption scandal but concluded there was no illegality in the transaction, sources said Friday.

The transaction was detected as the Seoul Central District Prosecutors Office looked into bank accounts of Kim Man-bae, who is at the center of the corruption scandal involving a lucrative apartment development project in the Daejang-dong district in the city of Seongnam, south of Seoul.

Kim, along with his business partners, is currently standing trial on charges that they reaped astronomical profits from the project through bribes and illegal lobbying.

According to recent prosecution findings, Cho borrowed the money from Kim via Hong Sun-keun, chairman of media firm Money Today Co., in July last year and paid it back with interest about three weeks later, the sources said.

Kim had previously worked with Hong as colleagues at Money Today, and Hong has been facing bribe-taking suspicions in connection with the scandal.

Prosecutors confirmed the money was transferred from Kim to Hong but concluded there was no illegality in the loan to Cho itself, the sources noted.

In response, Hanjin denied the group's suspected ties with Kim, adding the loan was taken through a third person due to a "short-term financial crunch."

"Around July last year, (Chairman Cho) asked for funds from one of his acquaintances to pay taxes, and the acquaintance borrowed the funds from Hong," an official at Hanjin said.

"Cho hasn't been aware of how the acquaintance raised the funds ... except for this transaction, no one at Hanjin Group has done any transactions with Kim's side," it added. (Yonhap)