"We have dismissed the second request as we judge that what the police have so far investigated is insufficient to substantiate the allegations," a prosecution official told reporters, declining to be named.

Cho, who doubles as CEO of South Korea's top airline, was questioned by police in September. He has denied any wrongdoing, saying he had no knowledge of the misappropriation.

The allegations were raised during a separate police investigation into possible tax fraud by an interior renovation company that works largely for business conglomerates.

In early July, police investigators raided the airline's headquarters in western Seoul and confiscated accounting books and contract documents. (Yonhap)