The Metropolitan Police Department will search the headquarters of the General Association of Korean Residents in Japan (Chongryun), possibly today, in connection with a suspected embezzlement case involving the failed Chogin Tokyo credit union, investigative sources said Tuesday.

The MPD has unofficially questioned two senior officials of Chongryun, a group of pro-Pyongyang Korean residents here, for their alleged role in the suspected embezzlement of 1 billion yen by Chong Gyong Saeing, the former head of Chogin Tokyo, and several others.

Police believe at least 20 percent of the funds that Chong and the others allegedly embezzled were diverted to Chongryun.

The MPD is negotiating with the Tokyo District Public Prosecutor's Office over the possible arrest of Chongryun officials in connection with the embezzlement case.

One of the officials, identified only as a 66-year-old ranking member of the group formerly in charge of finances, is receiving treatment at a Tokyo hospital and has so far denied any involvement in the case, according to the sources.

However, Chong has told investigators that he carried out the whole scheme on the instructions of senior Chongryun officials, the sources said.

Chong was arrested Nov. 8 on suspicion of obstructing the Tokyo Metropolitan Government's 1998 financial inspection of the union by withholding data on loan recipients. The suspected involvement of Chongryun officials came to light after police examined seized documents.

The MPD plans to serve a fresh warrant on Chong over the suspected embezzlement once the allegations are established, the sources said.

He is suspected of pocketing 1 billion yen under the guise of loans to more than 20 bank accounts opened under false or borrowed names from 1994 to 1998.

Around 70 percent of the 1 billion yen is believed to have been used to make it look like Chongryun-linked borrowers who were in arrears in their repayment of debts to the credit union were paying their due interest on the loans, the sources said. The remainder of the money went to Chongryun itself, they added.