Chaebol chiefs ready for hearing

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Chaebol chiefs ready for hearing

Since political parties agreed Monday that chiefs of nine conglomerates, including Samsung, Hyundai and SK, will testify at a parliamentary investigation into the presidential corruption scandal, Korea’s chaebol community has been on alert.

The testimony will be broadcast live on Dec. 6, a day later than originally planned, and the business leaders will face questions regarding their combined 77.4 billion won ($65.59 million) in donations to the Mi-R Foundation and the K-Sports Foundation. The gifts are believed to be slush funds for President Park Geun-hye once her term is set to end in February 2018.

The witnesses are Lee Jae-yong, vice chairman of Samsung Electronics; Chung Mong-koo, chairman of Hyundai Motor; Chey Tae-won, chairman of SK; Koo Bon-moo, chairman of LG; Shin Dong-bin, chairman of Lotte; Huh Chang-soo, chairman of GS; Kim Seung-youn, chairman of Hanjin; Cho Yang-ho, chairman of Korean Air and Sohn Kyung-shik, chairman and CEO of CJ.

The hearing at the Assembly will be a gathering of the largest group of top business leaders in front of lawmakers and journalists for questioning in Korean history.

“No previous administration has summoned such a massive number of chaebol heads en masse for a parliamentary probe,” said a disgruntled executive at one of the conglomerates.

Should any of the leaders try to skip the hearing, they will face a backlash from the public. The National Assembly also can issue an order to force them to attend. Refusal to follow the order can bring a prison sentence of up to five years.

The chaebol is concerned that lawmakers are using the parliamentary investigation to promote themselves. Some have become stars after making outrageous comments or vociferating against witnesses, which makes chaebol insiders fear their chairmen will humiliate themselves in public. Having to answer on the spot is also a burden, given that a mistake could erupt into a huge liability.

At a time when businesses are supposed to be wrapping up the fiscal year and establishing business plans for the new year, the top conglomerates are preparing for the investigation. Many have established internal task forces and some are rumored to have hired a leading law firm for the hearing.

While many chaebol insiders describe the hearing as just a formality, some experts say it’s a necessary step to severing Korea’s chronic back-scratching alliance of the government and businesses.

“I don’t expect any fresh truth to come up in the hearing,” said Kim Sang-jo, chairman of Solidarity for Economic Reform and a professor of economics at Hansung University in Seoul. “Regardless, it’s an inevitable process that will put a break on the chaebol’s past wrongdoings and make them realize the cost of them. Unless conglomerates are hit by such stimulus, they will never improve themselves.”

If Samsung’s Lee shows up at the hearing, which Samsung has declined to confirm, it will be his second public speech since he apologized to Middle East respiratory syndrome patients in June 2015. “Our fundamental stance is cooperating with the questioning to the fullest, leaving no room for suspicion,” said a Samsung spokesman without elaborating.

Samsung is in deeper trouble than its chaebol peers. The company is suspected of providing favors to Choi’s daughter, a dressage athlete. Prosecutors on Wednesday raided the National Pension Service and Samsung Group’s strategic planning office to examine whether the Blue House coerced the public pension fund to approve the merger between Samsung C&T and Cheil Industries in return for hefty donations to the two foundations.

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