SEOUL: Two people including a Korean businessman in New Zealand have been arrested on suspicion of collecting intelligence on military equipment for North Korea, police said Thursday.

The pair, arrested in early May, were a 74-year-old man identified only as Lee, and Kim, 56, who acquired New Zealand citizenship and was involved in trading with North Korea.

Lee was sentenced to life in prison on espionage charges in 1972 and was released on parole in 1990, but still retains allegiance to Pyongyang, police said in a statement.

The two had collected information on military equipment and devices capable of disturbing global positioning system (GPS) signals, an investigator told AFP on condition of anonymity.

They also met a suspected North Korean agent last July in China's northeastern border city of Dandong, he said.

“We have secured evidence to prove they collected intelligence on sensitive military equipment, but it's not clear whether they have actually passed the information to the suspected agent,” he said.

The South periodically detains people accused of spying for its communist neighbour.

Espionage can carry a maximum penalty of death in the South, although no one has been executed for any crime since 1997.

The latest case followed Seoul's accusations that Pyongyang had transmitted signals designed to jam GPS systems of hundreds of civilian aircraft and ships in South Korea from April 28 to May 13.

Seoul said the signals originated from the North's border city of Kaesong, forcing sea and air traffic to use other navigational equipment to avoid compromising safety.

The North rejected the South's accusations as “sheer fabrication” aimed at slandering the communist state.

The GPS jamming incident came at a time of high cross-border tensions.

The North has threatened “sacred war” against the South in retaliation for perceived insults during Pyongyang’s commemoration in April of the centenary of the birth of founding leader Kim Il-Sung.