He is also accused of providing one of Jun's aides, identified as Yoon, with a corporate credit card when he had no position with the association. Yoon reportedly spent a large amount of money using the card.

Prosecutors are looking into why the TV home shopping channel, which has little to do with computer games, made the large donation to the association amid speculation it was part of an effort to seek Jun's influence in its efforts to renew its broadcasting license.

Jun belonged to the parliamentary committee on broadcasting and communications at the time. His aide, Yoon, is suspected of forcing Lotte to make the donation in exchange for a promise not to take issue with Lotte's license renewal.

In a message sent to reporters later in the day, Jun refuted the prosecution's claim over the 300 million-won donation.

"The license renewal had already been done with in late April. The (media reports that alleged some sort of a deal was made in May is not even a fact," Jun said.

He said he will seek every legal action possible regarding such false reports.

Jun said earlier he is ready to face a probe "anytime," while expressing frustration at "wild speculation." Jun has flatly denied any involvement in the scandal.

"I feel deeply sorry that I have caused concern to the president," he said in the previous statement to reporters. "On the other hand, I am pondering on whether it is the right practice to step down without verifying the facts," he added.

The scandal is posing a tricky dilemma to the ruling Democratic Party, as it could undercut the government's anti-corruption crusade and reform drive.

Despite Jun's denial, concerns are rising that he could become a political liability for the young administration and embolden opposition parties to escalate their offensive. (Yonhap)