SEOUL (AFP) - A top Seoul official admitted there was no "clear evidence" wages paid to North Korean workers in a joint industrial zone were used to fund Pyongyang's nuclear and missile development, a report said on Monday (Feb 15).

Unification minister Hong Yong Pyo had claimed on Sunday that about 70 per cent of wages paid to North Korean workers were syphoned off to the North's ruling Workers' Party.

He used the claim to justify Seoul's decision last Wednesday to abruptly withdraw from the Kaesong industrial complex - where South Korean firms operated factories that employed North Korean workers - to punish Pyongyang for its latest nuclear and missile tests staged in violation of UN resolutions.

The shock pullout sharply escalated tension and imposed huge losses on the 124 South Korean firms operating at the industrial park.

Any foreign currency earned in North Korea is transferred to the Workers' Party, where it is used to develop nuclear weapons - or purchase luxury goods - Mr Hong said in the televised interview on Sunday.

The comments sparked controversy over whether Seoul had been helping fund the North's widely-condemned weapons programmes.

However Mr Hong, pressed by Seoul lawmakers to present clear evidence to back up his claim, said on Monday he was simply "expressing concern" over such a possibility, according to Yonhap news agency.

"If there is clear proof for the North's misappropriation, it would constitute a breach of relevant UN resolutions," Yonhap quoted Mr Hong as saying during a meeting with lawmakers.

"There are concerns about the North's misuse of the money, but I've not said that there is clear evidence," he said before apologising for "creating so much misunderstanding," according to Yonhap.

The zone, which sits 10km north of the tense border, was officially shut last Thursday after Pyongyang expelled all South Korean managers and placed the complex under military control.

Since its opening in 2004, Seoul firms have paid wages worth US$560 million - including US$120 million over last year alone - to the North's state authorities supervising 53,000 workers at the complex.

Seoul was aware of the problem of wages being siphoned off but had maintained the project regardless due to its status as a symbol of inter-Korean cooperation, Hong said Sunday.

The isolated but nuclear-armed North staged its fourth atomic test last month and put a satellite into orbit on Feb 7 with a rocket launch that most of the wider international community condemned as a disguised ballistic missile test.