SEOUL (REUTERS) - The wife of South Korea's most wanted man, a businessman linked to a ferry disaster in which hundreds of school children drowned, was arrested on Saturday, prosecutors said, as the net tightens around the fugitive's family.

Police and prosecutors arrested Kwon Yoon Ja, 72, on suspicion of embezzlement after chasing her for more than 20 days, an official said.

Prosecutors and police are seeking Yoo Byung Un, 73, who has eluded one of the country's biggest manhunts for more than a month. The husband of Yoo's younger sister, a former ambassador to the Czech Republic, was arrested on Friday on suspicion of helping Yoo escape arrest.

Yoo is wanted on charges of embezzlement, negligence and tax evasion stemming from a web of business holdings centred on I-One-I, an investment vehicle owned by his sons that ran the shipping company, Chonghaejin Marine.

Chonghaejin owned the Sewol, which sank off the southwest coast on April 16 killing more than 300 people, many of them school children, on a routine journey from Incheon on the mainland to the southern holiday island of Jeju.

Authorities suspect Kwon, who owns one of Yoo's subsidiary companies that sells health supplements, poured funds into companies owned by her husband and son.

Reporters bombarded her with questions - "Are you in contact with your husband?" "Do you plead guilty to all charges?" "Why have you been hiding?" "Do you know where your husband is?" She did not reply.

The sinking of the Sewol was a disaster that prompted a national outpouring of grief and anger, especially after some crew were caught on video abandoning ship while the children, following instructions, stayed in their cabins.

Yoo's elder brother, Yoo Byung Il, has been arrested on charges of embezzlement and violations of real estate laws. His daughter, Yoo Som Na, has been held in France after Interpol called for her arrest "for fraud and embezzlement".

Yoo, a photographer who once had an exhibition at the Louvre in Paris, was once jailed for fraud, has eluded capture in a case which has become an embarrassment for authorities already under pressure for their handling of the disaster.

Police and prosecutors twice raided the compound of a religious sect he co-founded, using earth movers to search for tunnels, but to no avail.

Authorities have offered a half-million-dollar reward for Yoo, the maximum allowed for an individual in a criminal case.

Lawyers for the 15 surviving crew of the Sewol, who face charges ranging from homicide to negligence, argued on Tuesday that it was up to the coastguard to rescue the passengers, not them.